Placing BTL in ltd company

Essex22011

I'm not sure if this is better posted in here or in investments 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

Comms69

Are these properties mortgage free?

oldbikebloke

Essex22011 said:

I'm not sure if this is better posted in here or in investments 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

if that is as far as you have got teaching yourself you have hundreds of miles still to go
property 1
since you intend to renovate and sell it is a "venture in the nature of a trade", not the "realisation" of a capital investment  - you will pay income tax on your profit, not CGT.
That will actually help you since I doubt any of the renovation costs would be capital in nature anyway, they would be revenue 

https://uklandlordtax.co.uk/investor-or-https://uklandlordtax.co.uk/investor-or-developer/

flats
a company would on the few facts you list have potential tax efficiencies. However, the properties would need to be given to the company not to you and then transferred 

I suggest you pay for professional tax advice given how close you are to the higher rate band and how little you know 

Essex22011

Comms69 said:

Are these properties mortgage free?

No they are not. But around 50% equity

oldbikebloke

Essex22011 said:

Comms69 said:

Are these properties mortgage free?

No they are not. But around 50% equity

have fun trying to get a mortgage for the company then as you can't have a BTL mortgage yourself if the company owns them

foxy-stoat

How has the lender gifted you 50% mortgages? 

Salemicus

There are advantages and disadvantages of putting the properties in a limited company.

Advantages

• Mortgage interest fully deductible.
• Potentially lighter tax on income (dividend allowance, can "time" dividends, can divide income with spouse easily, etc)
• Potentially better taxes on capital gains.

Disadvantages

• Stamp duty on doing the transfer (including the 3% additional for it being held by a company).
• Corporation tax @19%.
• Difficulties with financing (banks will be reluctant to lend to the company).
• Additional accounting requirements etc.

There may be others I am forgetting.

Essex22011

oldbikebloke said:

Essex22011 said:

I'm not sure if this is better posted in here or in investments 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

if that is as far as you have got teaching yourself you have hundreds of miles still to go
property 1
since you intend to renovate and sell it is a "venture in the nature of a trade", not the "realisation" of a capital investment  - you will pay income tax on your profit, not CGT.
That will actually help you since I doubt any of the renovation costs would be capital in nature anyway, they would be revenue 

https://uklandlordtax.co.uk/investor-or-https://uklandlordtax.co.uk/investor-or-developer/

flats
a company would on the few facts you list have potential tax efficiencies. However, the properties would need to be given to the company not to you and then transferred 

I suggest you pay for professional tax advice given how close you are to the higher rate band and how little you know 

Yes I know very little, hence me asking advice on a public forum

oldbikebloke

Essex22011 said:
Yes I know very little, hence me asking advice on a public forum

the point is you will not learn all you need to know for your double scenario through asking potted questions on a forum as no one is going to cover all angles, in complete detail, based upon them being cognisant of the full facts of your personal financial circumstances, particularly as it would tip you into higher rate tax and therefore the options need exploring in careful detail

Essex22011

foxy-stoat said:

How has the lender gifted you 50% mortgages? 

I'm taking a mortgage out to cover the mortgage. 
My mortgage broker has advised it will be quite easy to get a mortgage in ltd company

Essex22011

Salemicus said:

There are advantages and disadvantages of putting the properties in a limited company.

Advantages

• Mortgage interest fully deductible.
• Potentially lighter tax on income (dividend allowance, can "time" dividends, can divide income with spouse easily, etc)
• Potentially better taxes on capital gains.

Disadvantages

• Stamp duty on doing the transfer (including the 3% additional for it being held by a company).
• Corporation tax @19%.
• Difficulties with financing (banks will be reluctant to lend to the company).
• Additional accounting requirements etc.

There may be others I am forgetting.

Thank you this is very useful x