Selling Property portfolio in SPV LTD

Selling Property portfolio in SPV LTD - Tax considerations and implications

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Hi All,

Please could someone help, looking at a sale of a property portfolio, SPV Ltd Company.

2 directors . 3 properties, 3 mortgages and 3 personal gaurantees on both directors.

What would be the most tax efficient way to sell these? 

I understand if we sell the company then its possible for buyer to not pay Stamp duty however how does that work with the mortgages and Pg's that need to be cleared?

Guidance and expertise would be much appreciated. TIA

Replies (19)

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RLI
By lionofludesch
24th Feb 2024 17:34

Another SPV question.

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Replying to lionofludesch:
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By FactChecker
24th Feb 2024 17:45

I'm looking forward to the first person to post here who can explain the pros and cons of what they considered *before* using a SPV.
... they did have reasons I presume? Oh!

OP: Was "the most tax efficient way to sell the properties" not one of those initial considerations?
And anyway, what do you mean by "tax efficient" (for whom? / which taxes? / over what timescales?).

Hint: if you want to explore your options (which would have been better done before buying the properties), then paying for professional advice is still not a bad idea.

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RLI
By lionofludesch
24th Feb 2024 17:55

"I understand if we sell the company then its possible for buyer to not pay Stamp duty however how does that work with the mortgages and Pg's that need to be cleared?"

The mortgages go with the company, assuming they were in the company's name.

The personal guarantees stay with whoever gave the guarantees.

That's the problem with SPVs.

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By Leywood
24th Feb 2024 17:55

chianghammond wrote:

Hi All,

Please could someone help, looking at a sale of a property portfolio, SPV Ltd Company.

2 directors . 3 properties, 3 mortgages and 3 personal gaurantees on both directors.

What would be the most tax efficient way to sell these? 

I understand if we sell the company then its possible for buyer to not pay Stamp duty however how does that work with the mortgages and Pg's that need to be cleared?

Guidance and expertise would be much appreciated. TIA

Not expecting accountants on here to provide free tax advice would be much appreciated.

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By Matrix
24th Feb 2024 18:38

chianghammond wrote:

What would be the most tax efficient way to sell these?

I would ask TaxAssist.

Buying a company and its associated history/liabilities may be a bigger factor for a buyer than avoiding stamp duty.

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JCACE
By jcace
24th Feb 2024 19:16

You need to ask this question of a professional to whom you can provide all the relevant background and historical information and who can then ask all the inevitable follow-up questions.

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Replying to jcace:
RLI
By lionofludesch
24th Feb 2024 19:23

As FactChecker remarked, better if you appoint a professional before you start. As opposed to a firefighter.

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Replying to jcace:
RLI
By lionofludesch
24th Feb 2024 19:23

As FactChecker remarked, better if you appoint a professional before you start. As opposed to a firefighter.

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Replying to lionofludesch:
JCACE
By jcace
24th Feb 2024 19:36

But it is what it is. The OP might have taken advice before starting out or might not have, but regardless, proper professional advice is needed now. And better to fight fires than simply let them blaze.

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Replying to jcace:
RLI
By lionofludesch
24th Feb 2024 23:23

This case is what it is. But we might prevent a next time, either for the OP or for some future casual visitor to the forum.

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Replying to lionofludesch:
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By Tax Dragon
25th Feb 2024 06:46

Slightly ambiguous there lion, so let me clarify: you mean that we might encourage said persons to take advice before investing, not that they might decide what to do (without such advice) based on what they read [in] here.

I'm sure the latter happens all the time, but it's ill-advised and is explicitly warned against in "how to use" and elsewhere - and we definitely should aim to discourage it.

Case in point: so-called SPVs are oversold and overused - but they have their place.

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By DKB-Sheffield
25th Feb 2024 00:54

Big question... too big for here...

- Tax efficiency does not always equal increased proceeds or gain for the seller (regardless of whether Stamp Duties are payable, or at what rate).

- What is the interest to the seller in Stamp Duties and the seller's tax efficiency? Are the seller(s) and buyer(s) connected?

- As the properties are mortgaged I'd expect the consideration for the company would be affected on the assumption the mortgages are held by the company (assume this to be the case with the PGs)

- Who are the sellers in the transaction? You mention directors - likely one in the same as shareholders or are there other interested parties?

- Are all shareholders natural (no corporate shareholdings)?

- Tax considerations aside... what do the lenders say about this? Ultimately many balls lie in their court! They will likely drive what is possible - tax efficiency can't be achieved if the mechanics are impossible.

- Are all properties 'investments', are they all 'residential' (you don't state), are any used within the business.

This is the tip of a very large iceberg... and many are questions a tax adviser will need to know. There are many, many more questions to ask, just to get an understanding - before giving a jot of advice.

I'm not suggesting you give any answers in here - the aim of my post is not to fact-find... it's to emphasise how your question is unlikely to garner a 'yes','no', or simple answer. Indeed all of my questions may be irrelevant to your case.

Incidentally... 'SPV' is not a special type of company. It is a company. How the company is structured, how it is owned, or what the company can/ can't do (M&A) may differ.

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Replying to DJKL:
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By FactChecker
25th Feb 2024 17:31

A well-written briefing that any potential buyer of OP's properties (direct or via acquisition of the SPV) would be advised to read ... and which OP may still find to be enlightening (albeit a little late in the day).

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By I'msorryIhaven'taclue
25th Feb 2024 16:47

Have you considered selling the properties individually, rather them as a job lot selling SPV Ltd's shares?

Wouldn't you expect to attract higher offers by marketing them piecemeal? Not to mention widen your market to buyers interested in acquiring just a single property! Whenever I buy three jars of after shave in Boots, I expect a sizeable discount. BOGOF!

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By sonoftwosheds
26th Feb 2024 17:47

nothing to do with a possible answer, but does anyone else get chessed off with the whole SPV thing....your companies not special, its not treated any differently to any other ITS JUST A COMPANY

and breath....

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Replying to sonoftwosheds:
By Ruddles
26th Feb 2024 17:53

Would it be less offensive to your sensibilities if you were to consider instead that the "S" stood for "Specific"?

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Replying to Ruddles:
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By More unearned luck
26th Feb 2024 19:23

I thought that it had been agreed in an earlier thread that the S stood for Spectrum.

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By Matrix
26th Feb 2024 18:08

I think of an SPV as an orphan entity which may be used in a structure to separate the assets from the original business.

Although it doesn’t say who owns the shares here.

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