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Partial transfer of property

Part transfer of property into ltd co to limt CGT

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I suspect that there is HMRC ruling or legal reason why this can't be done.

 

but no idea where to start looking,

is it possible for private landlord (mortgage free) to transfer/sell part of the rental property to a limited company to limit the CGT by transferring an % of ownership equal to the cgt each year until the property is full owned by the limited company? 

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Replying to Tax Dragon:
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By Martymcfly
07th Mar 2021 11:11

Thanks so it is possible if done correctly, reason for doing it is to put rental property into LTD due to changes in taxation of rental properties and tax planning for IHT. So everything will be process on a cash transaction at arms length.

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Replying to Martymcfly:
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By Tax Dragon
07th Mar 2021 11:52

Martymcfly wrote:

So everything will be process on a cash transaction...

That kind of thinking is one example of where it can fall over. If it's "a transaction", then it's all taxed up front. It needs to be a series of discrete transactions. (And that's why there has to be solicitor involvement - and ideally a valuation and accountant's advice - each time.)

The transactions are still linked for CGT and SDLT, but at least they're taxed separately.

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Replying to Tax Dragon:
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By Martymcfly
07th Mar 2021 13:03

Sorry for transaction I meant, each transfer of equity I.e yr 1, 100k property transfers 10% of equity, which is paid for by the company or shares offered. Yr 2 same again and so on

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Replying to Martymcfly:
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By Tax Dragon
07th Mar 2021 14:46

Just checking :-)

Btw (irrespective of whether the plan is a good idea), maximising tax efficiency on any one of the transfers probably means transferring at value. It's highly unlikely that 10% of a 100k property is £10k. Hence suggestion to use a valuer (as well as a solicitor) on each occasion.

(Plus the CGT proceeds are likely, in time, to outstrip the actual proceeds, due to the linked transactions rules, so there's quite a bit of valuation work to do in this process.)

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