Sell my Main Residence to my Property Ltd Co and lease it back to myself?

by Readers Question

10:44 AM, 28th October 2020
About 6 months ago

Sell my Main Residence to my Property Ltd Co and lease it back to myself?

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Sell my Main Residence to my Property Ltd Co and lease it back to myself?

I am interested in investigating the advantages/disadvantages of selling my main residence to my Property Limited Company and then leasing the property back to myself (possibly on a Opco/Propco type of arrangement).

My residential property is probably worth around £850k with a outstanding mortgage of £180k and the registered address of my Property Limited Company is my main residential address.

This Limited Company was established over 15 years ago and owns 5 residential properties.

Any comments welcome.

Martin

Comments

Neil Patterson

10:48 AM, 28th October 2020
About 6 months ago

Hi Martin,

Both myself and Mark can see no benefit to this?

There would be no CGT on the sale to the company but the company would pay Corporation Tax on any capital appreciation when it sells the property.

The company would also pay SDLT on the market value of the property being acquired and any existing mortgage would need to be repaid first.

Then you have issues such as ATED to consider.

Vistaro

11:21 AM, 28th October 2020
About 6 months ago

Reply to the comment left by Neil Patterson at 28/10/2020 - 10:48
May it avoid IHT and also protect against care home costs?

Neil Patterson

11:27 AM, 28th October 2020
About 6 months ago

Reply to the comment left by Vistaro at 28/10/2020 - 11:21
No, it would need to be a Smart Co. to help mitigate potential future IHT liabilities and the state take into account your overall wealth for paying care home costs.

Please see >> https://www.property118.com/tax/smart-property-company-structures/

April

13:36 PM, 28th October 2020
About 6 months ago

Section 7 of CRAG may be of interest. I am a lay person but I have read this guidance in full and very carefully and I believe it may hold various keys depending on your circumstances as regards the care home costs with which you are concerned.

XPP

15:40 PM, 28th October 2020
About 6 months ago

Reply to the comment left by Neil Patterson at 28/10/2020 - 10:48
On this scenario if it is a BTL mortgage the family members cannot stay or rent the property. Am I right?

Neil Patterson

15:53 PM, 28th October 2020
About 6 months ago

Reply to the comment left by XPP at 28/10/2020 - 15:40
It would then be a regulated/consumer BTL and fall under different rules and criteria.

alocjtoi

1:45 AM, 1st November 2020
About 6 months ago

I'm trying something similar transferring a part of my garden with a garage to my limited company. Maximizing the value to reduce possible capital gains while keeping it all under SDLT threshold. Whole idea is trying to rebuild the garage into a bigger workshop at the expense of the company, but I'm not entirely sure I will be better off in the end.

Bradbeck ltd

16:56 PM, 30th January 2021
About 3 months ago

Reply to the comment left by Neil Patterson at 28/10/2020 - 10:48
What is ATED?

Bradbeck ltd

17:01 PM, 30th January 2021
About 3 months ago

I have an unencumbered home .. I also have directorship of my Ltd Company which holds 10 properties ... My current lenders are not in the market for further lending ... but I want to expand the company portfolio and buy a particular property ... Can I sell (at a reduced rate)or Give my home my home to my Ltd Company to allow for it to be borrowed against to raise company capital and expand the portfolio ?


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