Stamp Duty LTD Company Purchase
Discussion
Sorry if this has already been covered.
I'm getting conflicting advise from an accountant and a solicitor with regard to this additional 3% stamp duty. I have a LTD company currently purchasing a student HMO. Ive been trying to get it completed before the 1st of April before this additional 3% stamp duty comes in.
My solicitor is advising me that it doesn't effect a LTD company purchase. But my accountant says he think it does unless the LTD company has 15 or more properties.
I think my accountant is correct and unless the purchase is completed before the 1st of April the company will have to pay an additional 3%?
From a Q and A website on the new 3% surcharge -
Q. Can I avoid the surcharge by setting up a limited company?
A. The government has a keen eye on preventing tax avoidance with this new levy, so you won't be able to escape the surcharge by setting up a limited company for the purpose of buying an additional home or homes. However, at the same time the government wants to protect those deemed as 'contributing towards new housing supply' and is therefore considering exempting individuals (or companies) buying 15 or more properties at one time.
Q. Can I avoid the surcharge by setting up a limited company?
A. The government has a keen eye on preventing tax avoidance with this new levy, so you won't be able to escape the surcharge by setting up a limited company for the purpose of buying an additional home or homes. However, at the same time the government wants to protect those deemed as 'contributing towards new housing supply' and is therefore considering exempting individuals (or companies) buying 15 or more properties at one time.
Your solicitor is wrong. Your accountant is right.
Your solicitor is probably confusing the changes to SDLT, which apply to all (with the exception of bulk purchases as noted by another poster) with the changes to tax deductibility of mortgage interest, which apply only to individuals.
Your solicitor is probably confusing the changes to SDLT, which apply to all (with the exception of bulk purchases as noted by another poster) with the changes to tax deductibility of mortgage interest, which apply only to individuals.
I manage many student HMo's and own a couple myself, alas Ltd Co makes no difference...the slight problem is the legislation comes out on 16th march and the law society training courses for conveyancing lawyers start on the 20something of March.
Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
Rangeroverover said:
I manage many student HMo's and own a couple myself, alas Ltd Co makes no difference...the slight problem is the legislation comes out on 16th march and the law society training courses for conveyancing lawyers start on the 20something of March.
Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
That goes someway to explain why the solicitor is incorrect. I probably should find another firm in future, my dad and grandad used this one and they work on credit for me, so its always tempting to stick with them.Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
Its in Bangor North Wales.
We encourage all our HMO clients to use Alistair Dunnett at Veitch Penney in Exeter, this holds for properties all over the country not just in the South West......for the avoidance of doubt we get no commision from them; it just makes my life easier if a lawyer doesn't do the pompous "where is my quill pen" routine
Rangeroverover said:
I manage many student HMo's and own a couple myself, alas Ltd Co makes no difference...the slight problem is the legislation comes out on 16th march and the law society training courses for conveyancing lawyers start on the 20something of March.
Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
How do they treat single/protected cell Ltds?Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
Surely it becomes quite easy for the SC Ltd type company to run 15 cells for 15 different beneficial owners?
I assume that's been headed off as it seems so obvious a workaround.
DonkeyApple said:
Rangeroverover said:
I manage many student HMo's and own a couple myself, alas Ltd Co makes no difference...the slight problem is the legislation comes out on 16th march and the law society training courses for conveyancing lawyers start on the 20something of March.
Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
How do they treat single/protected cell Ltds?Despite that absolutely Ltd Co will pay the extra 3%, if you have 15 or more rental properties in a single holding Co then you will be exempt.
If you need a suggestion for a conveyancing lawyer who is quick, non pompous, answers the phone and gets the job done let me know
Out of interest where is the HMO
Surely it becomes quite easy for the SC Ltd type company to run 15 cells for 15 different beneficial owners?
I assume that's been headed off as it seems so obvious a workaround.
"Do you think that either the bulk purchase of at least 15 residential properties or a portfolio test where a purchaser must own at least 15 residential properties are appropriate criteria for the exemption? Which would be better targeted?"
The former seems the more likely approach for supporting investment in increasing the housing supply rather than landlords.
Not to mention the difficulties getting the money back out of the Ltd Company in the future.
If you sell the property that was in the Ltd Company, the proceeds will all stay in the Ltd Company.
You cannot just transfer that cash to yourself, without massive personal tax considerations.
You might be able to drip feed it out to yourself if your circumstances allow, but what matters is, anyone going the Ltd Company route has to be in it for the long game, to make it worthwhile.
And then the problem is who knows what George might do to property-owning Ltd Companies in the next few years.
He could quite easily come up with special high tax rules that only apply to property profits from Ltd Companies with fewer than say five employees, and instantly screw everyone that's sailed on that ship.
If you sell the property that was in the Ltd Company, the proceeds will all stay in the Ltd Company.
You cannot just transfer that cash to yourself, without massive personal tax considerations.
You might be able to drip feed it out to yourself if your circumstances allow, but what matters is, anyone going the Ltd Company route has to be in it for the long game, to make it worthwhile.
And then the problem is who knows what George might do to property-owning Ltd Companies in the next few years.
He could quite easily come up with special high tax rules that only apply to property profits from Ltd Companies with fewer than say five employees, and instantly screw everyone that's sailed on that ship.
Not so sure I concur. You'll be paying CGT on any gains made with non primary homes held in your own name. I actually see an advantage in holding the same gains in an Ltd as you can control better how the tax owed is paid to be as efficient to you as possible. And you get limited liability on your debt if it all goes wrong.
DonkeyApple said:
Not so sure I concur. You'll be paying CGT on any gains made with non primary homes held in your own name. I actually see an advantage in holding the same gains in an Ltd as you can control better how the tax owed is paid to be as efficient to you as possible. And you get limited liability on your debt if it all goes wrong.
Depends on if you want to extract the money from the company, how much, and how quickly. You're likely to pay more tax via the company route if you do extract cash. Which eventually is inevitable.
Alpinestars said:
DonkeyApple said:
Not so sure I concur. You'll be paying CGT on any gains made with non primary homes held in your own name. I actually see an advantage in holding the same gains in an Ltd as you can control better how the tax owed is paid to be as efficient to you as possible. And you get limited liability on your debt if it all goes wrong.
Depends on if you want to extract the money from the company, how much, and how quickly. You're likely to pay more tax via the company route if you do extract cash. Which eventually is inevitable.
Rangeroverover said:
The ltd Co route will also make debt more difficult as not all lenders are keen
You'd expect a lower LTV as its a limited liability wrapper so a lender would need more margin. But I wonder if the impending tax changes will somewhat level that as its unlikely for highly leveraged models to work in individual's names?DonkeyApple said:
Rangeroverover said:
The ltd Co route will also make debt more difficult as not all lenders are keen
You'd expect a lower LTV as its a limited liability wrapper so a lender would need more margin. But I wonder if the impending tax changes will somewhat level that as its unlikely for highly leveraged models to work in individual's names?I think most if not all mortgages available for LTD company buy to lets involve the director acting as guarantor.
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