Transfering commercial building from company to director

[elferUSA.com]

Hopefully someone knows the answer to this.

I am a British national, now living in the US (resident, will be applying for citizenship). My UK company which I am a 100% shareholder owns (mortgaged) a commercial property in London. The property is VAT elected (developer did this when new).

Is there a tax efficient route to transferring this property into my name?

My main worry is the VAT as I won't be able to claim this back, although I'm not clear on it any would be due given I do not reside in the UK?

There is a mortgage on the property from one of the UK banks. I am considering paying this off and writing the mortgage to the company myself – could there be an advantage to this?

I've held the property 8/9 years. Never had a valuation done on it since but my thoughts are commercial property can't be doing amazingly since the pandemic and the WFH movement. Perhaps now is a good time to do it as it will need to be at market value (my understanding) rather than one of those things where I pay £1 for it.

[MaxFromage]

You are suggesting the property is opted to tax, so the company will have to charge VAT on the market value.

This is a complicated topic with regard to tax efficiency/future plans/residency etc and so the only person who can answer your questions is your accountant.

[DaveA8]

Clearly you need specialist advice as it covers a multitude of things, recently I came into contact with a guy I went to school with in Ireland, I went to England and he went to Boston and became a U.S. citizen.
He was moaning how he’s still liable for some taxes even though he’s living permanently in the UK, I have no idea of the details etc but it seems like a real pain, if you are becoming a U.S. citizen , it would seem advisable to fully understand the tax liabilities if you ever intend to return.
As I say I have no knowledge of the exact details but I think it related to capital gains

[Panamax]

You can get your VAT back so long as the goods purchased leave the UK. That would be quite a good trick with a commercial building...

Presumably there will be significant Stamp Duty (SDLT) to pay if this is a valuable building.

Substantial property transactions with directors need shareholder approval, which won't be a problem in your situation.

[DaveA8]

[quote=Panamax]You can get your VAT back so long as the goods purchased leave the UK. That would be quite a good trick with a commercial building...

Presumably there will be significant Stamp Duty (SDLT) to pay if this is a valuable building.

If the mortgage does not exist at time of transfer then I recall there is no stamp duty but how to get to that point, being brutally honest how people risk hundreds of thousands in tax by not getting the correct accounting and legal advice is shocking and I include myself in that. The whole thing is probably not complex at all to a professional who has full overview.

[Panamax]

DaveA8]anamax said:

If the mortgage does not exist at time of transfer then I recall there is no stamp duty

On what basis do you believe that's the case here?

[DaveA8]

Firstly reading the initial post, the poster raised that they might pay the mortgage off and secondly the tax treatment of his transfer is separate from stamp duty.
It’s a matter of fact that a transfer at zero value without mortgage would not be subject to stamp duty and I also qualified they needed proper advice but the basis exists

[Panamax]

DaveA8 said:

It’s a matter of fact that a transfer at zero value without mortgage would not be subject to stamp duty

Correct, but a limited company can't simply "give away" its assets. As OP has mentioned, the transaction needs to be at market value (i.e. paid for at market value) so stamp duty will apply to that consideration paid.

[Chrisgr31]

The commercial property market is recovering but it’s very dependent on what the property is, where it is, covenant of the tenant etc.

[elferUSA.com]

Thanks for the replies, All.

My accountant seems unsure about it and wants me to find someone with some experience in it (he's not dealt with a situation like this before).

Property has a tenant and about 7 years remaining.

[22s]

I have had good experiences with Blick Rothenberg for complex property tax issues if your accountant isn't too hot on this stuff. (No affiliation apart from being a satisfied client, and I'm very picky).

[soxboy]

Commercial property values are largely holding up well (I am a valuation surveyor), although as with any averages there are some that are performing better and others that are crap. What and where is it?

If it is elected for Vat then you are liable to pay that on any price when buying it. An accountant would have to advise on what is the best way of doing it.