What can we do about latent gains in our rental property portfolio?Make Text Bigger
My wife and I want to incorporate our buy-to-let portfolio but our outstanding finance is £600,000 more than the purchase price and capitalised costs associated with the properties. From a tax perspective it seems we could be far better off if we incorporate, especially in a few years time when the restrictions on finance cost relief really start to bite.
We believe we qualify for incorporation relief but our understanding of how that works is that we will exchange equity for shares and the value of those shares will be applied to offset our capital gains. The problem is that our equity is £600,000 less than our capital gains. This leaves us with £600k we can’t get relief on and will result in 28% of that £600K falling due in CGT unless we can find a way around this problem.
Has anybody else had a similar problem and found a way around it?
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