Can I sell my house to my company?

Financially3

I am in the process of opening my our company and I want to know whether I can sell my house to my company. My sister also has 2 rental properties which she owns and would like to sell to my company. Is this legal? What will the tax/cost implications be?

Any advice is most welcomed.

Kez100

Is this house your principal private residence or a let property? Does it have a gain in it? How is the company going to buy it - owe you the money or borrow it from somewhere?

Financially3

Thanks Kez100

Came up with the idea of setting up the company and buying the house via the company as I was told that if I had initially bought the house via a company I owed it would have many tax benefits. But I am considering doing it the other way around (i.e. selling my house to my company)!

My house is my principle private residence and my sisters' properties are rental properties which are presently empty.

As for the finances, I am guessing that with the way things are - the company will own me the money. If on the other hand it is better for the company to borrow the money then we may have to go down this route.

What do you mean when you say "does it have gain in it?"

Ma77hew

I really don't see why you would want to do this.

You would be taking a bit of a risk, your sisters properties are BTL but currently empty, so who is responsible for their mortgage?

If they are in a company the company would be, if your house is also there and her houses get reposessed then the company will be liable, which will mean your house will also get repossessed because the company would be bankrupt, and liqudated all assets would be sold, to cover the debts.

Financially3

Thanks Ma77hew

She is presently trying to let out these properties and has had a few viewings. She is making the mortgage payments on both properties at the moment.

What if I just sold only my property to the Company?
What if my sisters' properties were let and she then sold them to the company?

[Deleted User]

Do you have a residential mortgage on it?

Financially3

Yes - does that make a difference?

Baz_2

You will obviously lose your principal private residence exemption status. i.e capital gains tax on any gains in the future.

Also you would have a benefit in kind would you not unless you pay the company rent.

Further more if the company did borrow the money to pay for your house then when you eventually sell the property not only would there be potential capital gains tax to pay but then you would also be taxed when you try to withdraw the funds from the company.

Not sure what you plan to gain to be honest. Are you trying to offset your mortgage interest against income from somewhere?

What does the company do?

Kez100

If it's your PPR I am at a loss.

I think you need to go back to the tax advisor and ask what he was on about.

teabelly

Unless the primary function of the company is to buy and sell or buy and let properties then you'll have real trouble getting a mortgage. Lenders don't like this idea and you will probably need to sign a personal guarantee which would make you liable for the debts anyway. It also takes much longer as there are 2 lots of solicitors involved in the process - one for your purchase and one for the lender. Some take months to decide whether to go ahead or not. I suspect in today's climate you'd have no chance.

One other solution might to be to create an LLP to do the same but you have the complication of a company and the same personal tax situation. Find yourself an accountant that really understands property taxation :-)

Richard_Webster

I have had clients who have been advised to buy BTL properties through companies for tax advantages but the problem often is that ordinary BTL mortgages are more difficult to get for ocmpanies so the tax advanatges can be lost, with higher interest rates etc. As for gettng a company to buy your house I really cannot see the point of that.