Moving property from a partnership into a Limited Company

by Readers Question

11:33 AM, 7th June 2014
About 6 years ago

Moving property from a partnership into a Limited Company

Make Text Bigger
Moving property from a partnership into a Limited Company

We’ve built up a private property portfolio of 4 houses, all rented on ASTs. Currently, each property has been funded with a cash deposit and separate BTL mortgage using my wife’s salary for the multiplier. We use an agent to get tenants and manage the day to day. Moving property from a partnership into a Limited Company

The cash pile is now running low, but we have about 50% equity across the portfolio and we only buy when rents comfortably cover the required borrowings. We’d like to set up a limited company, transfer the portfolio into it and remortgage commercially to release equity to use as further deposits, with the lender providing further advances as and when we find the right properties.

Question is – any idea how the property transfer can be done tax efficiently? If we sell and buy at original purchase price, there will be stamp duty to pay. If we sell and buy at current values, there might be CGT as well. Etc. etc.

I am talking to an accountant, but wondered: Has anyone done this? What did you do? Did you find any pitfalls or workrounds? Tips, suggestions?

Kind regards

Ian


Share this article

Twitter Facebook LinkedIn

Comments

Les Charneca

11:29 AM, 14th June 2014
About 6 years ago

Reply to the comment left by "Mark Alexander" at "14/06/2014 - 10:03":

It is swings and roundabouts. At the time it was set up (10 years ago) I was married and had IHT issues running into 7 digits!

I would not do the same now, firstly the advantages are now marginal, at best. More importantly though you can no longer get a loan at 80% at 1.5% over base with no setup charge, without a personal guarantee and where you can chop and change your security as long as you never exceed 80% loan/equity ratio. You could never do that with BTL's.

Times are different now so I would act differently, but my wealth now is based on that great decision 10 years ago.

I sadly take all the advisors with a pinch of salt.

Ian From Leeds

15:13 PM, 20th June 2014
About 6 years ago

Thanks for all your replies.

More food for thought. Looks like on balance it's not as good an idea as maybe I first expected?

Regards

Ian

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Auction watch - 4 auction deals at forthcoming sales

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More