Selling my residential to my own company

Kalashnikov

for now very hypothetical

is it possible to - sell my residential property to a BTL company I own ?

looking at the art of the possibilities. I would want to upsize, at the same time keep the property to let out and reduce my stamp duty liability on the new residential purchase.

ideas ? thoughts ? feedback ? legalities ?

Doozergirl

Corporation Tax and Income Tax at the other end of the transaction are going to make the SDLT bill look small.

Comms69

Kalashnikov wrote: »

for now very hypothetical

is it possible to - sell my residential property to a BTL company I own ?

looking at the art of the possibilities. I would want to upsize, at the same time keep the property to let out and reduce my stamp duty liability on the new residential purchase.

ideas ? thoughts ? feedback ? legalities ?

Perfectly fine. Ofcourse if the BTL company goes up in smoke, your home (which would be exempt) would be seized

Kalashnikov

Doozergirl wrote: »

Corporation Tax and Income Tax at the other end of the transaction are going to make the SDLT bill look small.

care to elaborate ?

a BTL in a BTL company is obviously going work better in ROI than PAYE. my income for augment sake is already 100k +

going further forward, buying a new residential in london 800K plus as a 2nd property SDLT is going to be ludicrous, dont you think ?

800k

2nd property SDLT 54k
single property 30K

davidmcn

Kalashnikov wrote: »

going further forward, buying a new residential in london 800K plus as a 2nd property SDLT is going to be ludicrous, dont you think ?

800k

2nd property SDLT 54k
single property 30K

You realise it's the same rate if it's a limited company buying? It would be a rather obvious loophole otherwise.

Kalashnikov

davidmcn wrote: »

You realise it's the same rate if it's a limited company buying? It would be a rather obvious loophole otherwise.

Agreed - Limited companies
The SDLT surcharge will generally apply to additional property being purchased by limited companies. This applies to both existing companies and newly formed companies for the purpose of purchasing additional property.

I still think for income tax purposes this could be the better approach for tax planning purposes.

Thanks

sal_III

Doozergirl wrote: »

Corporation Tax and Income Tax at the other end of the transaction are going to make the SDLT bill look small.

Not sure what you mean here? If anything there will be significant ongoing "savings" on income tax as you will essentially lend the ltd. the funds for the purchase, charge CT deductible interests on the loan and then withdraw the money overtime from the company income personal tax free.

The main concern here is how are you going to fund it - both the purchase by the company and the personal purchase of your new home?

SDLT savings for the new £800k might not matter, when your company will have to pay SDLT on the purchase of your existing property

silvercar

Mortgage interest rates for limited companies tend to be higher than for resi.

Are you intending to pay rent to your limited company?

sal_III

silvercar wrote: »

Mortgage interest rates for limited companies tend to be higher than for resi.

Are you intending to pay rent to your limited company?

Read OP again, the intention is to move out of the property. Any "personal" vs ltd. BTL interests rate difference will be more than worth it, considering you can expense the interests on the latter, but no longer can on the former.

buggy_boy

As a 40% tax payer it will definitely be better to do what you propose, plus from a SDLT point of view will also be more favourable..

If you leave the property in your name you will pay 3% additional SDLT on your new more expensive (presumably) property, where as by selling to your own ltd company you will pay the additional SDLT on your old property but because it has been disposed of you will not have to pay the additional rate on the new property..

corporation tax is currently 19%, you draw out £2000 dividends income tax free, you can leave the money in the company until you retire or are no longer a 40% tax payer, you can also add shareholders like wife, kids etc and each can also take £2k dividends income tax free (providing this is your only dividend income).

There are further benefits such as purchasing a phone for the director is deductible, annual entertainment events upto £150 per employee plus one guest each is deductible (Do not go even a penny over).

The negatives are the money in the company account is not yours to spend how you like, it is a separate legal entity. Because of this there is a fair amount of work you need to do with regards companies house and filing of corporation tax... You may want to seek an accountant to do this, its not impossible (I do my own) but it is complicated...

My advice would be to speak to a financial advisor/accountant that specialises in property to make sure you do it the correct way as one mistake can be very costly.

buggy_boy

sal_III wrote: »

Read OP again, the intention is to move out of the property. Any "personal" vs ltd. BTL interests rate difference will be more than worth it, considering you can expense the interests on the latter, but no longer can on the former.

Not strictly true, I understand what you are saying but for clarity..

Currently no interest can be offset against tax, you would pay tax as if that interest was profit. The government then give you a 20% rebate on that amount, this is important as even if you are a 20% tax payer but the interest takes you into the 40% tax bracket you will pay 40% tax on the interest and then receive 20% rebate meaning although you think you are only a 20% tax payer you will still effectively pay 20% tax.

For 20% tax payers that even with the interest as profit do not reach 40% rate then effectively there is no change and no tax is paid on interest as the 20% rebate offsets the 20% you pay. for 40% tax payers effectively you are paying 20% tax on that interest.