Transferring rental property to limited company

Transferring rental property to limited company

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A client wants to transfer personally owned property in to a limited company as they are an employed higher rate taxpayer.

The client has been given an idea from others in the same situation that to be honest I don't think will fly. This being renting the property to the limited for a small rental fee. The limited then renting out the properties and taking the rental income and paying CT.

Any thoughts would be welcome and also any ideas on how to take rental income into a limited without paying stamp duty or CGT on the transfer of the properties.

Many thanks.

Replies (16)

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By cheekychappy
09th Feb 2016 15:27

There are ways to mitigate the tax. But for one property, I can hardly see any benefit, if at all when taking into consideration the compliance costs.

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Replying to stepurhan:
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By tanyajackson
09th Feb 2016 15:51

Thanks for the feedback. The portfolio is growing, some larger developments too. I have heard that properties can be held in trust in the individuals name, any thoughts on this ?

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By Ruddles
09th Feb 2016 15:31

Think

"Imputed lease premium"

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Replying to justsotax:
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By tanyajackson
09th Feb 2016 15:52

Can you elaborate on imputed lease premium please, thanks

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Portia profile image
By Portia Nina Levin
09th Feb 2016 15:57

You appear to be attempting trapeze work without a safety net.

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Replying to Kelly0909:
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By tanyajackson
09th Feb 2016 16:07

Like it. But haven't contemplated climbing the ladder yet lol

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paddle steamer
By DJKL
09th Feb 2016 15:57

Is there property borrowing?

Is there property borrowing to be considered?

Any change has to recover frictional costs, with SDLT, legals, tax et al it really has to be worthwhile, and of course assumes no future changes re property taxation; if residential properties I would be a little hesitant in assuming the future will be the past, they are still a very political topic and I would not be that surprised to see some changes in the next few years. (Property, like a puppy, is not just for Christmas)

Property management company charging the individual might be possible but depends on scale of activity as to whether  this might have critical mass to be worthwhile.

So, in essence, is what the client wants something you ought to support or is the cure worse than the ailment?

 

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By Ruddles
09th Feb 2016 16:03

Start here

CG70825

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By tanyajackson
09th Feb 2016 16:12

Thanks everyone. You have pretty much confirmed what I suspected. The fact that HMRC are [***] on landlords from a great height at the moment and in the future should be signal enough that there was not an easy tax saving solution to be had. Our tax system can pride itself in knowing instead of pulling everyone up for a brighter future it just pushes down those who take a chance, thrive and succeed.

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By Justin Bryant
09th Feb 2016 17:47

This is

More the area of advice of a good tax lawyer than an accountant I think you'll find.

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Replying to I'msorryIhaven'taclue:
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By Portia Nina Levin
09th Feb 2016 18:16

Or...

Justin Bryant wrote:

More the area of advice of a good tax lawyer than an accountant I think you'll find.

You might try a unicorn!

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Replying to I'msorryIhaven'taclue:
By cheekychappy
09th Feb 2016 19:13

Do

Justin Bryant wrote:

More the area of advice of a good tax lawyer than an accountant I think you'll find.

 

you know one?

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Replying to Wilson Philips:
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By tanyajackson
09th Feb 2016 21:59

Unfortunately cheekychappy not aquainted with any Unicorns.  Do know a bunch of mad hatters though, pay for their tea parties in fact.  I think its called....lets see Parliament and HOL. ;-)

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d
By puzzel
09th Feb 2016 22:58

But then

If associated parties of the property,then there is no capital gain charge or loss, of a transfer of an asset from a sole trader to a company however, their may be a SDLT depending on the value of the property at market value.

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By Ruddles
10th Feb 2016 08:22

What?

No capital gain on transfer of an asset from self to company? Please do expand.

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By tanyajackson
18th Feb 2016 12:55

Puzzel please expand on this...

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