Second home stamp duty refund upon sale to own limited company

baffledpanda

Hey everyone, 

I am looking for some advice for my particular situation. I am looking to transfer a BTL property that I currently own into a limited company. This property was my main residence for ten years. I recently bought a new residence with my husband but was not able to sell my previous flat in time given market conditions and therefore paid second home stamp duty on our new main residence. 

If I were to sell my previous main residence to a limited company where I am the sole director, will I be able to reclaim my second home stamp duty? I know that the limited company will have to pay the additional stamp duty on the purchase but that property is worth much less than my new property so it is net net a cash inflow for me, if I can claim back second home stamp duty.

When I had a quick look at the HMRC form for the refund, it seems to require me to input the full name of the purchaser and doesn't seem to have an input to name a limited company as the purchaser. Is this observation correct or can I put the name of the company? 

I'd imagine I can't be the first person out there who's explored this so would really appreciate some advice here. 

Thank you so much!

Hoenir

Will you realise a capital gain in disposing of the property to the limited company? The limited company will in itself be liable to pay stamp duty on the acquisition. 

DE_612183

I presume as well that the Ltd company will rent out the property - pay for the maintenance etc and then if there is any money left over after tax pay you some sort of dividend?

Keep_pedalling

This is something to talk to your accountant about. You might gain on SDLT but you will have other expenses associated and work with such a move.

baffledpanda

Thank you for the responses. 

 Hoenir said:

Will you realise a capital gain in disposing of the property to the limited company? The limited company will in itself be liable to pay stamp duty on the acquisition. 

Yes the limited company will pay stamp duty on purchase. Based on my calculations, c. £500 of capital gains tax will be due as the period in which it wasn't my main residence was only a small percentage of my total ownership tenure. 

DE_612183 said:

I presume as well that the Ltd company will rent out the property - pay for the maintenance etc and then if there is any money left over after tax pay you some sort of dividend?

Yes, I've done of the calculations. In addition to dividend, as I will not be transferred cash to myself to buy out my own equity, I will be reflecting that via a director's loan. So I am planning to take out the residual profit as a repayment of the loan. 

Keep_pedalling said:

This is something to talk to your accountant about. You might gain on SDLT but you will have other expenses associated and work with such a move.

Excellent. I have spoken to my accountant and he believes this is possible, in terms of SDLT refund. Given that I am a higher tax rate payer, the payback period for the associated costs is short given lower corporate tax rate and tax deductibility of the mortgage. 

MsWils

Hello @baffledpanda

I'm in a similar situation and can't seem to find any clarity on this on the gov website. Info online is sketchy. 

We moved out of our house to extend and completely refurb. Once wed moved out the builder let us down. In the meantime we got offered a property off market that we didn't need to extend and in a better location. Long story short we used most of the funds in our business to purchase our own property through a ltd company. This was because the new property purchase was time dependant and we had not completely finished the renovation. Both properties are in a popular area and so we thought we'd have no problem selling it when we needed to. Or possibly remortgage and rent out.

Anyway, Im trying to find out if we sell the original property within 3 years will the ltd company be able to get a refund for the stamp duty? 

Did you get any further forward with your situation? Thanks

DE_612183

Is the company the registered owner - or did you just use the funds in the business bank account to purchase?

subjecttocontract

The Property 118 web site & Cotswold Barristers are usually very helpfull with complex/ unusual property tax issues.