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Gifting property to limited company

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I have a client who wants to gift their personal residence which is going to become a buy to let.

The company is owned primarily by the wife whilst jointly held by the couple. It is unencumbered. The reason to do so is if it forms part of the portfolio they can raise more funds than if its let on its own (based on their financial advisor feedback due to other incomes). With that in mind they are exploring this option.

Would there be SDLT on this transaction? I understand gifting unecumbered doesnt encouter SDLT person to person but not sure if the same applies person to company. Also they are hoping to get back the 3% they will pay on their new home. Property is worth circa £800k.

Also for CGT it would be tax free as it was their personal residence up till now and they are due to move out next month and then do the transfer. 

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Hallerud at Easter
By DJKL
03rd Mar 2021 22:57

Why, why , why,(Delilah), they honestly wish to capture an asset within a company whereas one of the most common things clients want accountants to sort for them is unwinding assets/value out of companies. (Also they really think they can get cheaper finance via a company, not in my experience, however if they trust their financial adviser what could possibly go wrong)

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Psycho
By Wilson Philips
03rd Mar 2021 23:08

Not to disagree with DJKL but we haven’t been asked to advise on the merits or otherwise of the proposal. I would hope though that the OP has a word in his clients’ ears with regard to the first word in his headline.

In answer to the questions asked, yes PPR relief should be available based on the information given

And yes, there would be an SDLT charge, based on MV and including the supplement.

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By Calculatorboy
04th Mar 2021 00:07

Exasperated....

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By Duggimon
04th Mar 2021 09:08

In case my colleagues have not been blunt enough, and I do recognise as Wilson has said that we are not being asked to advise on the plan itself, nevertheless I wanted to make the point that gifting the house to the company is stupid.

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Replying to Duggimon:
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By Paul Crowley
04th Mar 2021 10:34

+1

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By Paul Crowley
04th Mar 2021 10:45

There is probably more commission to be made on arranging loans for a company compared to arranging loans for a person.

Still if client chooses to make such bad decisions based on mortgage intermediary advice all you need to do is to point out it writing that you were not part of advising on the increased tax liabilities arising therefrom.

Client been watching you tube?

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By Paul Crowley
04th Mar 2021 12:01

Had not really thought of the corporate landlord
First £50K at 19% and divi tax if the profit comes out

Future is 26.5% plus divi tax for profit over £50K up to £250K
Profit includes capital gains

Tax charges on an exit really interesting

Will the youtube advice stay the same?
i.e. talk to us and property experts I recommend

Ignore the person that just does your books

Apologies
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