Landlord Incorporation ChecklistMake Text Bigger
If you’re contemplating a transfer of your rental property business into a Limited Company, this checklist will prove extremely useful for you.
- Does the operation of your rental property business occupy at least 20 hours a week of time, including that of agents and contractors whose services you engage? If so, you may well be able to claim incorporation relief, which rolls the capital gains in your properties into shares in the company you are transferring the business into.
- Do you share ownership, income, risk and expenses with at least one other person? If so, you may well be a partnership by de-facto, whether you are registered as such with HMRC or not. When a company takes over the whole business of a partnership a form of Stamp Duty relief applies, often meaning the company pays no Stamp Duty at all on the properties transferred into it.
- Are the total liabilities of your business lower than the acquisition costs of your properties? If they are, then a pre-and-post incorporation Capital Account Restructure could facilitate the subsequent withdrawal of funds from the company without further personal tax consequences, e.g. net proceeds of property sales, retained profits or net funds resulting from remortgaging.
- Decide whether or not you wish to refinance or retain your existing mortgage terms. We can assist you with either scenario.
Reasons to consider transferring your rental property business into a Limited Company structure include the following:-
- The ability to offset finance costs against rental income as a legitimate business expense
- Limited Liability
- More opportunities for inheritance tax planning
- The ability to raise capital though share sales and new shares issues
- Easier access to funding
- Retain profits for reinvestment, paying down debt or simply to accumulate cash at significatly lower tax rates than the higher rates of personal taxation
Landlord Tax Planning Consultancy is the core business activity of Property118 Limited (in association with Cotswold Barristers).
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There will never be an optimal ‘one-size-fits-all’ business structure for tax purposes. The presentation below provides a useful overview of some of the options you might like to discuss with us.