Avoid stamp duty by transfer?

vistaman_2

We are about to rent our house for £4k per month but have a mortage of only £150k to offset against the rent.
After fees and maintanance we will have a profit of around £25k


Purchase price years ago was £205k
I understand if we rent and keep it in our name we can claim tax relief on interest on £205k only.
To reduce profit we'de like to increase the mortage payments.
Can we do this by transferring house to our ltd company which could take out a higher mortage based on the transfer value?
Would we pay stamp duty?


vistaman

CLAPTON

you can remortgage for the present value of the house and offset the interest against rental income.

don't understand your question about stamp duty as at the moment you dont have to pay any anyway.

no idea about pros and cons of transferring to a company

vistaman_2

Thaks Clapton, have reworded original.
The core question is avoiding stamp duty in the transfer.
1/ Can we transfer our house to our company without incurring stamp duty?
2/ Can the company then take a £400k mortage to offset rental income.



Vistaman

iolanthe07

You need to take professional advice. This is an open forum, and often contributors have only the vaguest idea of what they're talking about. The implications of what you are contemplating are too important to leave to amateurs.

Captain_Mainwaring_2

iolanthe07 wrote: »

You need to take professional advice. This is an open forum, and often contributors have only the vaguest idea of what they're talking about. The implications of what you are contemplating are too important to leave to amateurs.

Whilst the bones of what you say may well be true, don't you think you sound like a pompous twit? I doubt anyone would take action based upon the advice of someone he has never met, particularly someone who drives a Micra.


Back to the OP, why do you need to transfer the asset to remortgage it? wouldn't doing that then possible even make the rental payments subject to VAT? Something only a corporate tenant would tolerate.

I am also interest to know if you can remortgage a property to reduce liability to taxation in such a case, my thoughts are that the "bonus" obtained at remortgaging in such a case would perhaps be liable to CGT. Regarding Stamp duty - if you have a change of ownership then I would suspect that there would be a liability to stamp duty which would soon wipe out your rental profit.

However as the nice man said, pay a good accountant a few quid and get the right advice.

silvercar

You can claim mortgage interest as an expense to set against rental income upto the value of the property when you first let it. No need to transfer it to different names, but you do have to incur the expense in order for it to be accepted as an expense.

To have mortgage interest of about 25k a year, you would need a mortgage of around 360-400k. I don't know what the property is worth, but presumably with that rental it would be a lot more.

GDB2222

vistaman wrote: »

Thaks Clapton, have reworded original.
The core question is avoiding stamp duty in the transfer.
1/ Can we transfer our house to our company without incurring stamp duty?
2/ Can the company then take a £400k mortage to offset rental income.



Vistaman

1. No, but take advice as there are stamp duty mitigation schemes from time to time.

2. Yes, but then the company would end up with £400k of cash on deposit.

Frankly, this whole scheme sounds completely misguided to me. You have £48k taxable income less expenses, and no amount of transferring that around is going to extinguish the tax liability. You want to do some sensible tax-planning, but I don't think this is it. I think you should go see an accountant, make sure he has details of all your finances, and get his advice on what it is practicable to do.

iolanthe07

particularly someone who drives a Micra.

There's no need to be rude, and I don't drive a Micra. (My OH once owned one - why don't you read posts properly?)

Doozergirl

I would ask on the cutting tax board rather than this if you want an answer before the one your accountant gives.

Whilst I understand the point iolanthe07 is trying to make, there are experts on this forum as well as amateurs (I'm certainly no expert on this matter, lol!) and I'm sure the OP won't just decide on one poster's advice. There's hardly any point in having a forum at all if you think that an OP is going to take every piece of advice they are given. Are all your 583 posts telling people not to take the advice given on here?!