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Transferring rental properties to ltd company

Transferring rental properties to ltd company

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With the changes in tax relief for buy to let properties a client is considering a setting up a ltd company and moving the 2 properties into the company..

My understanding is that the assets would need to be treated as disposed of and capital gain tax assesses on the disposal by the individual. Is that correct or is there any other way to utilise the asset without transferring, e.g. paying a nominal fee (as exactly asked by the client)?

Is the mortgage going to change, i.e. transferred to the company as well? Would you know an estimated cost of that?

Are there any other tax implications, apart from being able to claim the full mortgage interest to assess profit on the rentals?

It seems to me that the CGT outweigh the potential benefits, but maybe I am wrong?

Thank you.

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By Phil Yaboots
05th Jan 2016 00:06
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05th Jan 2016 10:55

It is possible to achieve a tax-free transfer into a limited company, but what does the client want to do with the net rental income?

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05th Jan 2016 23:28

I am not sure about this - will need to ask, what bearing does it have on the profitability of the transfer? I would imagine she wants to pay herself a dividend having deducted the full interest on the mortgage from the rental income.

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