property title transferred out at nil value

property title transferred out at nil value

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Can anyone help!!!

There are two companies A & B with same shareholder.

There were historic loans from company B to company A to provide funds for property purchase.

Now both the companies are not required and the shareholder has requested to transfer the property title to his own name (for nil consideration) and wish to waive off the inter company loan

How should we treat the transfer out of property in the company accounts?

Also if one of the property title is transferred to some other company with same shareholder as above but the company is in different jurisdiction.

Replies (5)

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By johngroganjga
13th Apr 2016 20:05

Whatever the actual consideration is (£Nil or otherwise) the company will be deemed for tax purposes to be selling the property at market value, and may have a tax liability accordingly.

In what sense is the company that owns the property "not required". That sounds like an odd thing to say before it has disposed of its property. After the property has gone, and it is dormant, that would be a different matter.

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Replying to Wilson Philips:
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By pankaj
13th Apr 2016 22:19

Thanks John.

From the company's point of view there will be no issue regarding capital gains as the company is registered in a jurisdiction where there is no tax on capital gains.

So in the company books should we credit the asset with historic cost and debit the p&l as realised loss? Once the company is dormant we will then put it for liquidation.

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By Ruddles
13th Apr 2016 22:48

Overseas?

If the company is registered in a jurisdiction with no capital gains tax, would it not be better to ask the opinion of those with local knowledge? You don't say where the management and control of the company sits. Nor do you indicate the nature/location of the property.

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By johngroganjga
14th Apr 2016 04:32

Overseas company
Scrub my response then. As Ruddles says you have asked your questions in the wrong country.

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By Montrose
14th Apr 2016 16:20

UK tax could apply in a number of ways

1] Has the property been used for a trade conducted in the UK [such as  an hotel] by the same company.?

 

2]Has the company owning the property been filing for income tax as a foreign landlord?

 

3]SDLT also needs to be considered,.. A transfer in specie in a liquidation or by way of an offshore dividend-properly documented !- may avoid the problem, unless the transfer is subject to a loan.

 

4] Has ATED applied to the property?

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