Conflicting advice from 2 accountants on how to sell and re-invest

by Readers Question

19:55 PM, 5th January 2017
About 2 years ago

Conflicting advice from 2 accountants on how to sell and re-invest

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Conflicting advice from 2 accountants on how to sell and re-invest

My husband and I own a portfolio of properties in Aberdeen and want to sell to re invest in smaller more manageable properties in Edinburgh for our retirement. We’re both higher rate taxpayers.conflicting advice

We’ve been advised by one accountant to firstly sell our portfolio into a limited company to avoid CGT at 28% and then the company would sell the portfolio on the open market incurring LBTT but avoiding capital gains tax if the profits were reinvested in more property (roll over relief)

Our 2nd accountant says that rollover relief won’t be available as it only applies to business assets.

Can anyone help or should I find a third accountant ?

Karen



Comments

Mark Alexander

20:15 PM, 5th January 2017
About 2 years ago

Hi Karen

Neither of the accountants that have advised you so far are right.

I will be delighted to assist you on a fixed fee basis and if I am unable to assist you, and direct you to the relevant legislation and professional advisers to assist you with implementation, then you will be refunded in full.

Please see >>> https://www.property118.com/optimal-tax-planning/91857/

Without significantly more information than you have provided so far it is impossible to advise you.For example, number of properties, mortgages outstanding, other incomes etc.
.

Ajith Mathew

11:10 AM, 6th January 2017
About 2 years ago

Your accountants may be referring to the Ramsey case which you may be able to benefit from. I would suggest reading a book in this regard (Ian Wallis) , arm yourself with knowledge and then find an accountant with specialist property experience. You will be able to have a more rewarding discussion

Mark Alexander

11:41 AM, 6th January 2017
About 2 years ago

Reply to the comment left by "Ajith Mathew" at "06/01/2017 - 11:10":

No need to read a whole book - it's all here >>> https://www.property118.com/section-162-s162-refief-landlords/82564/
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Puzzler

22:23 PM, 10th January 2017
About 2 years ago

The first transaction would incur CGT at full market value. How would it not? The subsequent sale might not but you will have paid it already on your current gains - assuming you have gains in the current Aberdeen market (and there wouldn't be a subsequent gain anyway if done immediately).

Business rollover relief is not available for residential property, whether it is in a limited company or not.

Your 2nd accountant is right. The first one is not. If in doubt ring the HMRC helpline.

Mark Alexander

15:37 PM, 11th January 2017
About 2 years ago

Reply to the comment left by "Puzzler " at "10/01/2017 - 22:23":

Hi Puzzler

You asked ...

"The first transaction would incur CGT at full market value. How would it not?"

Incorporation relief may be available to offset the first transaction under section 162 TGGA - see our Tax Planning section. If the business is a formal partnership SDLT relief may also be available under schedule 15 of The Finance act 2003.

The problem though, even if those reliefs are available, would be the money sitting in the company. This is because withdrawals would be subject to dividend tax. However, if Karen and her husband wanted to retire elsewhere in the world (e.g. Malta) there would be ways around that too.

Without a full consultation it isn't possible for me to advise further.
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Karen McKee

16:11 PM, 11th January 2017
About 2 years ago

Hello
Thank you to Mark and everyone who contributed.
Our first accountant now concurs with the second that roll over relief isn't available on residential property Thanks again
Karen

Mark Alexander

16:24 PM, 11th January 2017
About 2 years ago

Reply to the comment left by "Karen McKee" at "11/01/2017 - 16:11":

Hi Karen

That's better than before, at least they both agree on what can't be done now.

What's not so good is that neither of them has come up with a solution that works for you.
.


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