Transfer of property to Limited Company

Transfer of property to Limited Company

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Scenario 1
I have a client who had an investment property before and lets this out initially in his personal name. Subsequently the client has now formed a limited company with his wife & now wishes to transfer this property in his limited company. Below are the questions that relates to this scenario:

a) Would the transfer of the property to the new limited company be regarded as disposal for CGT purposes?
b) Does this property then needs to valued at its current market value for it to be introduced into to the new limited company?
c) If the client is liable to CGT then is this due by 31.01.17 assuming this relates to the 2015/16 tax year?

Scenario 2

A dad has gifted his private residence to his son & daughter in law and since then they have introduced this property into their new limited company. They (son & daughter in law) now wish to draw monies against their director’s current account in the new limited company. Can they draw up to the maximum value of this property based on it’s current market value against their director’s current account?. Please note that there is no mortgage on the private residence gifted by the dad.

Replies (1)

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paddle steamer
By DJKL
17th Apr 2015 23:04

Re Questions

a. Yes

b. It will be purchased at the figure to be agreed between the sellers and the company but for CGT purposes re the sellers it will be treated as at MV as at the date of sale, irrespective of the consideration the company is actually to pay.

c.Yes

Also remember SDLT re the sale.

The DLA re question 2 will have been established when they sold the property to the company, you will need to consider what figure was used re the conveyance at that date. If this figure is more than their acquisition value from Father (is there a difference due to timing ?) they may also have a CGT liability re this sale.

Re question 2 the figures ought all to have been considered at the time of sale.

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