Investment Property

Investment Property

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Should an investment property, owned by client and his wife,  be held in  a limited company instead of by individuals

A new client owns , as tenants in common with his wife , a freehold in a flat and a dental surgery ( 1 building)

Both are pensioners. He was born in 1946, she in 1945

Cost including improvements £ 270,000 , purchased in 1993, worth now about £ 750,000

Should they consider a transfer into a limited company, with grandchildren as part shareholders, or would an interest in posession trust be better or should they just continue to hold in their own names ?

Property produces annual income of £ 35k

On another note, he is a high rate taxpayer, she is not so I have suggested that they change the trust deed from 50% each to the following

" such a share in ownership as the trustee and his spouse shall themselves decide from time to time"

as I think this will allow them to vary the profit split on the property income on an annual basis to shift his higher rate income to the lower rate taxed spouse

All comments welcome

Replies (2)

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By eastangliantaxadvisor
03rd Nov 2012 17:27

This is a question on which there are lots of answers - It depends

 

Some things to think about

 

Stamp duty - this will be payable if trasnferred into the company.

 

Capital Gain Tax - This could well set off a sizeable capital gain, so again, is it benefical to do it now!

 

It is usally best to consider this issue when a property is bought - not when there is such a sizeable gain at stake!

 

Income tax - even if you overcame the above issues, what income would be drawn? Is it going to be benefical for the extra costs of runnng the comany.

 

It would take some years for

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By amosprophet
13th Nov 2012 09:39

Many thanks for your helpful reply

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