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Purchase Of Land by limited company or personally?

Is it better to buy land and put in personal name or company name?

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A client has the opportunity to buy a piece of land for much less than the market value. He also uses some of this land for his business currently for free.

My question is, would he be better to buy this land through the company? rather than personally?

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Hallerud at Easter
By DJKL
27th Jul 2020 10:00

Please speak to an accountant, there is no correct answer and you already appear to have some incorrect beliefs regarding the position(eg IHT between Husband/Wife (presume that is what you meant) conditional on wife being a shareholder)

In fact if he carries the land in the company and dies and there is IHT then that holding might actually taint the shares in the company re IHT vis a vis the existing business and BPR.

First find out what client wants to achieve then plan how he achieves it, question one is therefore, "If he develops the land and sells what does he then want to do with the money?"

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Hallerud at Easter
By DJKL
27th Jul 2020 10:04

Re revaluation, if buying for development/resale then it is not an investment property but is trading stock (lower cost and NRV) and there only would be a revaluation if it were an investment property if say reporting under FRS102.

The purchase if bought by existing company might anyway need apportioned as you mention part is used by the trade.

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Replying to DJKL:
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By Tax Dragon
27th Jul 2020 10:25

There's an interesting point on what valuations you would use for tax. For capital gains, the disposal will be at market value (so the friend better be ready to pay tax on money s/he doesn't receive). Similarly, the acquisition for capital gains purposes would be at market value. (Notwithstanding that it's bought as stock, my view [hark back to the whisky barrel thread] is that this does not remove it from the remit of TCGA.) The cost for revenue taxation is, I think, as you say - actual cost.

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By Anonymous.
27th Jul 2020 11:44

Martin39 wrote:

A client has the opportunity to buy a piece of land for much less than the market value because he is buying from a friend. He also uses some of this land for his business currently for free.

I'd be interested to understand why someone would give something away. "because he is buying from a friend" isn't a reason to transact at less than market value. Does the friend owe your client something with this discount as recompense?

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