7:32 AM, 8th April 2016, About 5 years ago 10
For those new to buy to let and considering the letting of their current home, in order to buy another for themselves (usually at a higher price) there is a way to avoid the 3% SDLT surcharge on the more expensive property by following this strategy.
Create a new limited company and sell your current home to it. This will require you to obtain a company buy to let mortgage.
The new company will pay SDLT on (presumably) the lower value property. Remember, a company is a separate legal person in law.
No CGT will be payable on the sale because private homes are exempt.
Your next property will then be YOUR only property so the 3% SDLT surcharge will not be payable.
The buy to let property will sit in the company which will be able to claim 100% of mortgage costs as an expense to set against its profits. This is despite the Chancellors attack on landlords in the Summer 2015 budget. Furthermore, rental profits will only be taxed at the 20% corporation tax rate which is scheduled to be reduced to 17% by 2020. The first £5,000 of annual dividends to each shareholder of the company will also be tax free.
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