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SDLT/CGT savings on transfer to LLP

Would a transfer to a LLP save CGT/SDLT and what are the tax implications for the new partner?

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I have a client who owns 2 rental properties with her (now ex) husband.

She wants to buy him out with her new partner then being joint owner of the 2 properties with her.

If both properties were transferred into an LLP, from what I know (I have limited knowledge on LLP's) she wouldn't pay any SDLT/CGT on the transfer as her ownership remains the same, as an individual, and she would then still get taxed, at basic rate, on her rental income.

However what happens regarding the new partner and SDLT? I'm assuming he'd still have to pay this on his share of the property at market value?

So would there be any benefit at all to setting up a LLP for these 2 properties or not and just own as partners?

I have calculated the tax due if they set up a Ltd Co and transferred into them but with CGT and also the Ltd Co having to pay SDLT on the total cost of both properties, its looking better not incorporating.

Thanks in advance

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By The Dullard
23rd Jul 2021 22:07

An LLP isn't going to help you here. She gives cash to the new partner (s/he) and s/he buys the ex-husband's half share. S/he pays SDLT and the ex-husband pays CGT. End of.

You clearly don't have the competence to advise on this, so get them to engage with somebody that can provide them with the proper service that they deserve.

Question for you. Are the client and the new partner married or in civil partnership and how much difference do you think it makes to the analysis?

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