My LTD company buying my BTL
Discussion
Sarnie said:
^ That was my point.....
Oh... A bit of an oversight that one... 
I'm here thinking I will get £180k cash, forgetting I owe the bank the mortgage. Wouldnt be worth it then, based on the fact I will only get £55k cash, which is the same as if I drew £75k out as dividends
Back to the drawing board
Haven't read it in detail so I might have missed something. You sell the property to the company and there will be a CGT event as others have said, AND sdlt. There will be no loan in the company unless you sell the property to the company for a loan. Therefore no tax deductions.
If you do sell via a loan, the company might get tax deductions, but you'll pick up tax on the interest, which is likely to be at a higher rate than relief for the company. So a bad idea.
You'll pay sdlt "twice", once into the company, and once by the eventual buyer. This really is an incremental cost.
CGT will ultimately be paid on the same gain, so no doubling as such, BUT, how do you get the profit out of the company? Either a liquidation which might be income, or a dividend, which is income. Overall I think you'll end up paying more tax (income rates are higher than CGT rates).
Edited to add, at a high level, in summary;
You'll probably pay income tax vs CGT on the profit from hereon in, ie compare CGT rates (18 or 28%) vs income tax rate.
No deduction for interest costs.
SDLT on current value.
Upside is indexation allowance.
If you do sell via a loan, the company might get tax deductions, but you'll pick up tax on the interest, which is likely to be at a higher rate than relief for the company. So a bad idea.
You'll pay sdlt "twice", once into the company, and once by the eventual buyer. This really is an incremental cost.
CGT will ultimately be paid on the same gain, so no doubling as such, BUT, how do you get the profit out of the company? Either a liquidation which might be income, or a dividend, which is income. Overall I think you'll end up paying more tax (income rates are higher than CGT rates).
Edited to add, at a high level, in summary;
You'll probably pay income tax vs CGT on the profit from hereon in, ie compare CGT rates (18 or 28%) vs income tax rate.
No deduction for interest costs.
SDLT on current value.
Upside is indexation allowance.
Edited by Alpinestars on Thursday 1st December 20:34
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