How to transfer a house to a business

trixietoes

Just a little bit of advice or a point in the right direction.

OH and I have set up a Ltd company which will specialise in property development and also offer letting agency services, project management and quantity surveying (we are all qualified and members of ARLA & RICS). OH will continue to work until this earns enough for him to give up work.

We know in the current climate getting a mortgage for the 1st development may be tough. However in the interim we already own (mortgaged) 1 house that is rented out so we are thinking of using that as the 1st project as it could generate roughly 40k profit (IF sold).

Question is ... the company doesn't own this property (I do as a private individual) so how can we get it to become part of the business? We'd like proceeds from the sale or rent to become part of the businesses portfolio/capital to then reinvest.

Thank you in advance.

Mahmood_Reza

Hi Trixietoes,
General options & considerations include: Option (a) Ltd co = managing agent, charges commercial rate for its services. Considerations: get contract drawn up between co+you; Option (b) Transfer property to company and company is the direct recipient of any financial benefits; Considerations, many, I will mention some. Transfer of property = disposal for CGT purposes, stamp duty charge potential and mortgage may have to be re-arranged. Tax: Tax payable on property gains are less when the property is owned by an individual, approx £40,000 if owned by one individual, £80,000 is owned by two. In addition you have the 'problem' of taking the money out of the company, where additional taxes may be levied - dependant on a number of variables.
If you intend to trade in the properties, i.e. buying and selling then as individuals you will be subject to income tax up to 40%, min 21% via a company (you still have to take the money out, see above).
Option(c) company acquires additional properties using proceeds of house sales as deposits/funds. Considerations funds lent to the company = directors loans, personal indebtedness may increase
NB: if properties are to be owned as investment properties (long term) then there are less tax reliefs if they are residential properties and owned by a company.
Hope this is of some use