Transfer of Property
I am a little worried about what the answer to this may be, but here goes.
Client company has investment property in its books. Property was previously held as stock, however later retained for rental return and appropriated from stock to Investment Property.
Director wanted fresh funds into the company and decided to buy the property from the company.
The figures are as follows:
- Open market value, realistically c£90k.
- Valuation obtained from "friendly" valuer £100k.
- Client agrees to buy for £100k, legal contract concluded on that basis.
- Client obtains personal mortgage funds for £80k (80%) and deposits this and £20k cash to the company to complete the purchase.
- Company repays £20k to director as "cashback incentive" for property purchase.
I understand that house builders are giving cashback awards, but the fact that this is to director is worrying and I am trying to make best of the situation.
Sale proceeds within the company accounts, I think this should be £80k (because company has given the £20k back). This is actually quite a commercial situation.
This then raises the BIK question for director who received asset at undervalue, but is the undervalue just £10k (100-90)?
- Accountant software 404 11
- Accounting jobs in the UK 138 2
- Foreign income on Self Assesment 229 1
- What aspects of accountancy/book-keeping most trouble people 140 2
- Dividend paid to non-shareholder 197 4
- CIS gross status review 89 1
- Notes needed for a new partner in an LLP 123 2
- Dividend payments to spouses 348 6
- Flat rate vat error 242 5
- Whats the best way to keep my accounts? 134 5
- How do I clear transaction history - Sage 50 v9 143 2
- Whats the best way to keep my accounts? 81 1
- Property versus Trade in a Ltd Company 146 4
- When will Private Principal Residence Relief cut will start? 360 8
- Snotty HMRC letter - continued 619 17
- Dispensation pointless ? 268 4
- Accountant Pays Clients Tax 608 11
- Are bankruptcy restrictions order becoming more common? 202 4
- Charge out rates in London? 216 2
- Negative retained earnings & Dividends 184 3
- Desperately seeking Susan, Sam or anyone with any other name 752
- Experience with Islamic investor following Sharia-compliant rules? 483
- Darwinpay Partnership Assessment 297
- How to format a stock book 263
- S464A Charge to tax: conferring benefit & BIK 211
- Tax efficient holding company structure 201
- Outlook 2007 with business contact manager not loading on new laptop 190
- Investment property company accounts template 190
- auto enrolment - calculation of first pension deduction 168
- Sage 50 Customer Statements and Running Balances 160