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Transfer of Property to Limited Company

I have been approached by a client who own three properties - one is owned outright and the other two have mortgages. He is wanting to form a limited company and transfer the three properties to the limited company. He wants the limited company to comprise of three shareholders/deirectors.

I beleive the long term view is expand the property portfolio via the limited company.

Is this possible and what are the implications - I have phoned a few Solicitors, but seem to be receiving rather vague responses.

Any advice would be much appreciated.

Regards

AM

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By Mini Me
11th Jul 2011 18:12

property transfer

It can be done, but you have a few issues:

1) if to a company in which your client has interest, the transfer will need to be at market value. This may create an unwelcome capital gain! 

2) The finance on all three properties will need to be reorganised. (The properties are security for loans in the owner's personal name and title cannot be transferred to the company until the mortgages have been redeemed.)

3) Re (2) above, your client will probably end up on higher rates of interest as you will be moving into commercial funding rather than straightforward BTL.

4) Stamp duty cost + legal fees + your fees.

You need to look carefully at the overall strategy. There is an upfront cost (see 4) and your client needs to be certain that they want the properties to be subject to corpoation tax rather than CGT. Note that the company may also be taxable at mainstream rates as an investment company.

 

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By a_m
12th Jul 2011 09:31

Thanks.....

...sounds like best advice may be to leave things the way they are and if they want to do make further property purchases then they can do this through a limited company. To do this, will they just need a simple limited company with the required number of shareholders?

Thanks again

AM

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15th Oct 2013 19:18

Transfer of Property before a divorce

Hi all,

I have a client with the following issue

 

He currently has a property (on his sole name) in which he is currently living. For divorce reasons, he intends to transfer this property to a newly formed company, in which he will be the majority or sole shareholder. The main activity of the newly formed company will be Property Development. He does has another property, which he then intends to use as his Principal Private Residence.
I understand that for accounting purposes, the newly formed company will then have a credit balance in the Directors Loan Account equivalent to the value of the house, which he can then withdraw when cash are available.
As you can see, the main reason for the above is to avoid paying off too much to his ex-wife. Is that really an option available to him currently? Any more suggestion is more than welcomed.
Many thanks for all help.

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