Transfer property to SPV limited company?

by Readers Question

7:01 AM, 15th July 2019
About A year ago

Transfer property to SPV limited company?

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Transfer property to SPV limited company?

My wife and I bought a property on 28th September 2009 (cash £170,000) to live in. We moved out from this property on 16th November 2013 and it has been let out continuously from December 2013 until today. My wife and I have been managing this property ourselves.

The letting relief and Private Residence Relief is changing on 6th April 2020 which means that we will incur higher capital gains tax bills if we sell after this date.

The property has an outstanding mortgage of £144,411 on an interest-only mortgage and early repayment charge £4182 is payable if we sell before 30th April 2020. The property also has a second charge from Castle Trust known as “Buy to Let Equity Loan” where I have to repay £44,000 (loan amount) plus 40% of sale value – £220,000 (the property value at the time the loan was made)

The property is now estimated to be worth £300,000

My wife and I have a recently registered SPV limited company which will buy/hold/rent out properties. We are the only 2 directors of the company

My questions: What are the tax implications for us and our SPV limited company if we wish to sell/transfer the property to our own SPV limited company before 6th April 2020? How can we mitigate our tax bills? How do we transfer our own cash savings to our SPV limited company as deposit to purchase the property?

Thank you for your time and replies.

Terence


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Comments

Mark Alexander

9:48 AM, 15th July 2019
About A year ago

Hi Terence

The Stamp Duty alone will probably result in the transaction you have outlined not being commercially viable. This is because the company would have to pay £14,000 of SDLT.

You would pay also pay CGT on the uplift in value. HMRC has an excellent calculator to help you work this out - see https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/

Transferring to a Limited Company is just one of many tax planning opportunities to be considered to establish the optimal holding structure for your rental property(ies). However, without a full Fact Find, which is part of our consultation process, I am unable to offer you further guidance.

If you would like to book a Tax Consultation please see the link below.

https://www.property118.com/tax/

Terence Chua

10:16 AM, 15th July 2019
About A year ago

Thank you very much for your fast reply, Mark. I will consider booking for a tax consultation.

Chris Bryan

17:05 PM, 15th July 2019
About A year ago

Reply to the comment left by Mark Alexander at 15/07/2019 - 09:48
There is no consideration to be had the cost of the consultation is a steel I had one done and it blow me away and the saving huge is less than the price of a washing machine but far more affective at cleaning my tax


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