Seeking some initial advice

Seeking some initial advice

13:21 PM, 11th May 2023, About 10 months ago 11

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Dear Property118

I am looking for some initial advice as I want to help my mother with her property held in a limited company. Since my father went into care she now manages the company which holds two rental flats. There are mortgages on both. My brother are also Directors of the company. My brother lives in one of the company-owned flats…

How best to deal with this going forward so he can stay in the flat and our mother can pass on the company assets to us both jointly?

As I say it’s an initial question so pointers at this stage is appreciated. Obviously I’m willing to pay for advice going forward as needed and not looking for freebies.

Best regards

Robert


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Mark Alexander - Founder of Property118

13:26 PM, 11th May 2023, About 10 months ago

Hi Robert

Some initial pointers.

1) Are the mortgage lenders aware that your brother lives in one of the properties? This could be in breach of the mortgage terms.

2) It isn't clear who owns the company. Is it your father only, your Mother only, both of them jointly, or something else?

3) When you ask "how best to deal with this", please can you explain what you mean when you say "this" please? Are you referring to the potential breach of mortgage conditions or something else?

4) If company shares are transferred to you and your brother there may be tax consequences and a requirement to refinance the business.

5) Is it simply that you are looking into the future and deciding how your parents structure their Wills and how this will impact you on their passing?

Robert Neale

13:42 PM, 11th May 2023, About 10 months ago

Reply to the comment left by Mark Alexander - Founder of Property118 at 11/05/2023 - 13:26
Hi Mark

1 It is agreed (he has been there several years)
2 My mother is a director. My father is now retired from the company (he set it all up). As far as I can see there are 140Ks work of shares with a 100k/40k split mother/father. If you retire do you automatically lose the shares?
3 With this I mean from inheritance. As all options are open I would like to know if a continuation in the company would be best or insted just to sell it all and pay all the various taxes.
4 As I understand it there could be a planned tranfer of shares over time to minimise the taxes..
5 Yes, and if the better option is to close the company completely or maintain it as a going concern (Both options are doable but either way my brother needs to stay in the flat)

Thanks for any pearls of wisdom. Best regards
Robert

Mark Alexander - Founder of Property118

14:28 PM, 11th May 2023, About 10 months ago

Reply to the comment left by Robert Neale at 11/05/2023 - 13:42
Your answer to my Q1 is noted.

Your answer to Q2 is NO.

Your remaining questions cannot be answered without first completing a full discovery process which is the first element of a tax planning consultation with Property118.

David

14:48 PM, 11th May 2023, About 10 months ago

Company legislation requires 2 directors to sign certain documents related to a tenancy. I'm not sure your brother could be one of the two on anything related to his tenancy.

Ian Narbeth

15:10 PM, 11th May 2023, About 10 months ago

Reply to the comment left by David at 11/05/2023 - 14:48
"Company legislation requires 2 directors to sign certain documents related to a tenancy" No it doesn't. Tenancies of up to 3 years can be signed as contracts with a single signatory. Tenancies for longer than three years must be executed as deeds but even then a sole director can sign in the presence of a witness.

If you are thinking of the case where a judge held that a prescribed information notice had to be signed as if it were a deed that has been overturned.

Mark Alexander - Founder of Property118

15:14 PM, 11th May 2023, About 10 months ago

Reply to the comment left by Ian Narbeth at 11/05/2023 - 15:10
Thanks Ian, you beat me to it

Brian Jackson

11:35 AM, 12th May 2023, About 10 months ago

Property Problem
I have a property on a BTL mortgage.
The mortgage comes to an end in August 2023.
I can obtain another mortgage.
The Problem: I have another landlord interested in buying the property tenanted
The tenant is on a periodic tenancy but wants a new AST.
I have told the tenant they can have a new AST but the rent to be increased. All agreed.
Any ideas please on how to proceed.
I have been a landlord for 25 years but never come across a dilemma such as this
1 Should I take the mortgage (min 2yrs) Penalties.
2 Would the new AST still stand. Thank you
Brian

Mark Alexander - Founder of Property118

12:26 PM, 12th May 2023, About 10 months ago

Reply to the comment left by Brian Jackson at 12/05/2023 - 11:35
Hi Brian

Don’t take the new mortgage if you don’t want to pay the redemption penalties. Stay on SVR.

Tenancy Agreement are transferable, but be careful about agreeing another because you investor buyer could pull out and then it could be much harder to sell without vacant possession.

Brian Jackson

12:37 PM, 12th May 2023, About 10 months ago

Mark

Thank you

Steve Masters

14:07 PM, 12th May 2023, About 10 months ago

Robert: Are you aware of Annual Tax on Enveloped Dwellings (ATED)? If the property is valued at more than £500,000 you will be caught by this.

Sorry to add another issue rather than providing a solution. Just making you aware, just in case.

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