selling property to company

EXY

Hi,
I'm in the process of selling my property to my limited company for a full market value.
I don't have mortgage atm, and the company won't need a mortgage for purchase.
I'm very confused by the legal process.
Do I need one solicitor for the process?
or Do I need two solicitors - one for selling and one for purchase?
Thank you.
Ella

anselld

Before seeking a Solicitor you should probably find an Accountant to understand why it would be beneficial to do so in the first place. Seems an expensive strategy all round.

EXY

Thanks for the advise.
I'm buying a new house. Get rid of the current one means less SDLT for the new one. Saving is higher than the SDLT charge for selling my current flat to a company. Also, I'm thinking of rent the current property out once moving out.
I have talked to accountant and tax advisors. All seems make sense.

anselld

EXY wrote: »

Thanks for the advise.
I'm buying a new house. Get rid of the current one means less SDLT for the new one. Saving is higher than the SDLT charge for selling my current flat to a company. Also, I'm thinking of rent the current property out once moving out.
I have talked to accountant and tax advisors. All seems make sense.

Fair enough.

In that case the Solicitor you are using for your purchase should be able to process the flat sale to the LtdCo. It makes sense that it is simultaneous with the purchase.

Actual money does not need to change hands, it can be treated as an accounting transaction with Director loans. Unless of course you already have significant funds in the LtdCo which you are trying to extract.

Ideally the LtdCo should be a SPV specifically for letting. If you are setting it up purely to own one flat you should factor in the additional ongoing costs of preparing accounts, tax returns and Companies House filings for the LtdCo, probably at least £800 pa.

da_rule

There general rule is that a solicitor should only act for one party (the buyer or the seller). However, there is an exception where both parties have a common purpose and they are aware of the risks.

What you have to consider is that you have a legal duty as a director of the company to act in the best interest of the company and therefore shouldn't buy properties that are onerous to the company etc. This probably isn't the case (as you've lived in the property and know about it). Also, assuming you are the only shareholder, you are unlikely to report yourself.

EXY

Yes, I have been living in my flat for years. And yes, the accountant suggested director loan as well. However, everyone has different option on the legal process. My new house purchase solicitor insisted that I need anther solicitor to represent my company for purchasing my flat. However, when I was searching for the second solicitor, the new solicitor brought to me the idea of doing the process of 'transfer the whole value' as a changing of deeds. In that case, I only need one solicitor.
And I got confused.

anselld

EXY wrote: »

Yes, I have been living in my flat for years. And yes, the accountant suggested director loan as well. However, everyone has different option on the legal process. My new house purchase solicitor insisted that I need anther solicitor to represent my company for purchasing my flat. However, when I was searching for the second solicitor, the new solicitor brought to me the idea of doing the process of 'transfer the whole value' as a changing of deeds. In that case, I only need one solicitor.
And I got confused.

Ask them to explain the conflict of interest. Are there other shareholders iPod the LtdCo who may object to the purchase for example.

If you are the only shareholder then surely there is a mutual interest between yourself and the Company and it should not be a problem to represent both.

EXY

Thank you very much.
I'm the only shareholder of the company, as I registered the company as a SPV.
I'm going ahead on this one.
The solicitor said the laws was changed a few years ago.
I just need one solicitor to transfer the equity for me.
Going ahead on this. Very exciting.

SmashedAvacado

OP - i think you need to make sure that the transaction you are proposing gives you the result you are intending. I am not sure that it does. I would be ensuring my tax advisors give me that confirmation in writing.