BTL purchase in ltd company

Essex22011

I'm not sure if this is better posted in here or house buying and I'm new so please bear with me.. 
I am being gifted 2 btl properties. 
The first i am planning to renovate and sell.. I earn 45k a year. Would CGT be at 18%?

The 2nd property is two flats. I plan to renovate and rent out. I am thinking its best to set up a ltd company and put the flats in that. 
My reasons are mainly because it will push me into a higher tax bracket. 

Is it easy to do? Is there any reason not to do this? Thanks in advance x

unkle

Yes it is easy to do, however you will pay stamp duty as effectively the Ltd company is buying the properties from you. So you need to weigh up that additional cost. 
With regards to CGT, yes potentially payable if the property has increased in value since probate/you inherited, this would also apply to the houses you 'sell' to the Ltd company.

See here re CGT. https://www.gov.uk/capital-gains-tax/rates

Essex22011

Thanks can this not be gifted to the ltd company rather than myself?
Would that bypass stamp duty

unkle

No, I believe it would still be payable. When a property enters a company ownership it is based on the market value for stamp duty not the amount paid. Worth checking with a solicitor but I believe thats what happens. 

doe808

Essex22011 said:

Thanks can this not be gifted to the ltd company rather than myself?
Would that bypass stamp duty

You can do A-B-C transfers, but SDLT will be payable at one point in the transfer (based on market value). Take specalist advice.

Thrugelmir

Essex22011 said:

I am being gifted 2 btl properties. 

Is this an attempt to avoid CGT? 

NottinghamKnight

The gift may trigger a CGT liability on whoever is gifting you the properties and liability will be on market value not on what they are gifted/ sold. You probably need to consult an accountant, or the person who is giving them to you in any case. CGT increases from 18% to 28% when you cross the HRT limit so in your case an increase in value would generally be taxed at the higher value.

Sailtheworld

I'm not sure if this is better posted in here or house buying and I'm new so please bear with me.. 
I am being gifted 2 btl properties. 
The first i am planning to renovate and sell.. I earn 45k a year. Would CGT be at 18%?

The 2nd property is two flats. I plan to renovate and rent out. I am thinking its best to set up a ltd company and put the flats in that. 
My reasons are mainly because it will push me into a higher tax bracket. 

Is it easy to do? Is there any reason not to do this? Thanks in advance x

The CGT needs to be paid by whoever is gifting you the houses. By gifting all in one go they pay the CGT but avoid IHT if they can live another 7 years. They could do it piecemeal and avoid some CGT but they don't get the seven year IHT clock ticking on gifts that haven't been made. If they're trying to avoid future care costs either option might be considered deliberate deprivation of assets.

For you there's no CGT to pay and, if you go the ltd company route, there will be no future CGT liability. That doesn't mean holding a BTL in a company will be the best way to hold it though. There might be an advantage in SDLT in smaller regular gifts but don't know if that's still the case.

The best way forward is to consider why this transfer is happening and what both parties are trying to get out of it.

Essex22011

Thrugelmir said:

Essex22011 said:

I am being gifted 2 btl properties. 

Is this an attempt to avoid CGT? 

No there will still be cgt. This is an attempt to avoid IHT