Buying your own property

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82117097#Comment_82117097

Only you can answer how the company would finance it but it's next to no chance a UK lender giving a loan to a new non-trading company with zero assets. That's your obvious reason. Overcome that and it's possible.

The obvious solution is reduce the price.

CliveOfIndia

At the risk of sounding like a stuck record …

"How the company could finance the purchase" is the key point. The answer is, "it can't", so all the rest of your questions are irrelevant. The only way this would be feasible would be if you already had an established company with enough liquid capital available to buy the house.

user1977

Whether I could then use the money or equity released from the sale towards purchasing and flipping properties

If you can't just set up a new company to purchase those properties, how do you think it's going to buy your existing one?

anselld

It is not practically possible unless you answer how this Limited Co will be funded.

Or is this a wind-up?…

lincroft1710

You can't sell the house you already have. What makes you think any future purchases would sell easily?

Without sufficient capital to fund the limited company, the idea is a complete non starter

mta999

Yes you can set up a limited company with you as sole director

Yes your company (you as director) can make an offer for the property to yourself who would presumably accept the offer

Yes you can draw up a contract for sale, sign it as director (purchaser) and you (seller)

On completion day, the new company would transfer the agreed money to your bank account and you would give the company the transfer documentation which they would forward on to the land registry.

All legal and above board

As asked many times, is this new company able to finance the purchase so they can send the money to you?

If the company does not have the money you could set up a director's loan to the company for the purchase price

The property would then belong to.the company and you would either have the cash or a loan note.

Yes the company will have to pay SDLT (google the company rates).

The tax implications for you are that the property will no longer be your main residence (I assume it currently is) and therefore would not get cgt relief on any gain going forward

If the property it's not your main residence but say a second home then obviously you would have to pay cgt on any gain once the sale completes

(*) it seems like you might have a mortgage on the property obviously that will have to be redeemed upon completion so you will need to find the money for that

horsewithnoname

https://forums.moneysavingexpert.com/discussion/comment/82117097#Comment_82117097

if you set up a company, what money will the company have to buy your house with?
you need to answer this question first!

Chief_of_Staffy

"Has anyone done anything similar or is there an obvious reason why this wouldn’t work"

I doubt it, and yes, which accounts for the former.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6681185/buying-your-own-property

Yes.

my house is in the UK and has been on the market for two years, but unfortunately I haven’t been able to sell it. I’m wondering whether there is another option. Could I set up a UK Ltd company and have the company purchase the house from me? YES

I’m particularly interested in understanding:

Whether this is legally and practically possible YES, it is legally possible. It may not be practically possible

How the company could finance the purchase That is the question everyone has asked you. Given you have not responded with what the revenue source would be and given the impossibility of the newly formed company being able to raise the funds in the marketplace, the best route would be for you to lend the money to the company or contribute the money as share capital.

What would happen to my existing mortgage When the company buys the house from you, the money will be used to redeem your mortgage first. Any excess over and above the remaining mortgage balance will be remitted to your personal account. Assume there are no early repayment terms with the current mortgage.

What stamp duty land tax and other land taxes the company would have to pay The company will need to pay stamp duty on the purchase value (which must be open market value) - this will include the surcharge premium. When the company sells the property in the future, any increase in value will present in the books as profit and be subject to Corporation Tax as appropriate. There may be additional personal tax liability arise as and when the funds are eventually drawn from the company.

Whether there would be any capital gains tax or personal tax implications for me Assuming this is your current PPR, there will be no CGT on selling the house to the company. The company will not accrue future CGT, but note the Corporation Tax that will arise. You will incur personal tax liability on drawing the future funds from the company.

Whether I could then use the money or equity released from the sale towards purchasing and flipping properties If there is equity after redeeming your current mortgage, then you could do this. Do you have the skills and experience required to purchase and flip properties for appropriate gain?

Whether there are any UK specific rules, restrictions or reporting requirements that I need to consider You will need to keep accurate business accounts and satisfy the obligations of being the Director of the company.

I’m not looking to avoid tax. I’m trying to understand whether this could be a legitimate way of moving on from my property that I’ve been unable to sell for two years. Where will you live if you sell the current house to the company and then buy other properties to flip with the proceeds raised from the sale? What will the company do with the house?

Has anyone done anything similar or is there an obvious reason why this wouldn’t work The company does not seem to have the resources to finance the house purchase.

If you have experience of this please identify any jurisdiction specific rules that apply particularly UK rules relating to SDLT, tax, mortgages, company ownership and transaction with connected parties

Thanks for any advice

sherlock228

are you tax resident in the UK?

Your emphasis on UK company and UK property seems odd, almost as thought you in fact live "abroad"?

If it is in fact your actual home and you will continue living in it after it has been purchased (using what funds, a question you refuse to answer) by the Ltd which you control, then you (personally) will become liable to a benefit in kind annual tax charge for living in company "provided" property

Company provided living accommodation (480: Chapter 21) - GOV.UK