Think of changing my properties over to a Ltd company

[Just joint]

I am thinking of remortgaging all my properties over to Ltd Company but would like to know if any of the current members have already done this. I would be grateful if someone could let me know the pro's and con's of doing so.

Also if doing so would the new Ltd company have to come up with the 15% / 20% deposit so it could purchase them from me or could I get away with seller discount.


Please advise !!!!!!!!!!!!!
:o

[MrShed]

I assume you mean creating a new ltd company which you would wholly own yes? In that case there was a thread on it on the Tax part of these forums not that long ago....may be worth having a search on there. If I remember rightly, the benefits of doing so were generally assumed to be virtually non existant, and think it was advised that unless there was a very specific benefit you really wished to gain from it, just to leave as the status quo. But, I am no expert, just going on what I think I remember reading!


*EDIT* found the thread I think I was thinking of. Not much detailed info but never mind :p

http://www.landlordzone.co.uk/forums/showthread.php?t=971&highlight=company

Read in particular Karongo's last post(post number 8).

[Poppy]

This is not a case of remortgaging with a limited company. You will have to sell the properties to the limited company.

The buyer of the properties ie the limited company will have to pay stamp duty on the transaction as a whole. If together the properties are worth, say, over £500,000 the limited company will have to pay 4% stamp duty. Collectively, what is the value of your properties?

If you're that bothered about owning your properties through a limited company, buy the next properties through your limited company.

If I were you, I would probably leave the existing properties' ownership alone.

[Just joint]

Thank you for both replies.


The buyer of the properties ie the limited company will have to pay stamp duty on the transaction as a whole. If together the properties are worth, say, over £500,000 the limited company will have to pay 4% stamp duty. Collectively, what is the value of your properties?

The total value is around £950,000 for all my properties. Can you also let me know, when the Ltd company (if I decide to go ahead with it) buys the properties from myself would the Ltd company have to pay a deposit or am I able to give the Ltd company a sellers discount. So I don’t have to pay 20% of £950,000.

Thank you :)

[islandgirl]

Why doesn't the Limited Company rent the properties from you for a certain amount payable annually? The Ltd company then "sublets" the property. We do similar and it works well.

[Peter Lavery]

If you're struck on moving the properties into the Ltd. Co. name...
Yes, you have to sell them to the company. This will involve the Stamp Duty as mentioned previously.
If the company doesn't have the necessary deposit and can't raise finance based on valuation, then you could sell the properties at their valuation. You could then loan the deposit money to the company. However, as you will have made a Capital Gain on the sale, you will have to pay CGT.

Unless you can raise finance based on valuation. However, creative property financing for Limited Companies is an oxymoron.

I buy and sell properties. I have been looking at a Ltd Co method of retaining properties in a rental portfolio and have come to the conclusion that for BTS I use the Ltd Co. and for BTL I use my own name. Much less complicated - and simple is GOOD.

Regards

Peter

[Just joint]

I think you are all right.

Instead of changing my existing properties over to a Ltd company. I should just buy future properties with the Ltd Company. Thank way I don’t need to pay extra stamp duty and capital gains tax.


Thank you for all your help.

www.aaronproperties.com

[Jacob Oliver]

Thank you for your response and also previous threads.

The reason why I thought about selling all my properties to a newly formed limited company was to try and avoid Inhertitace Tax as my "children" would also be joint directors of the limited company. I should have realised the "cons" but no "pros".

Seems Mr Brown has got me. I will try and search Inheritance Tax avoidence but doubt if there is any solutions - Does anyone have any other advice?

[MrShed]

You can make a gift of X amount(cant remember the amount) per year without having to be taxed. So I would gift that amount to your children each year.

[rocket]

sorry of i missing something but if you created a Ltd compant and bought BTL property through it what are the benefits. There must be a few inregards to tax etc.