Placing BTLs in a Limited Company
Discussion
With both the recent changes in interest charges being tax allowable, for rivate landlords on BTL properties, and the change in stamp duty, I have recently been messed about by a potential buyer, the same who happens to be a solicitor.
The initial sales agreement being that completion should be prior to the 31 March, then when the buyer's bank failed to come up with the loan monies, the exchange of contract and completion date was extended, and extended, until today when we are no further advance than prior to 31 March.
My searches of this potential buyer, brings up several recently purchased BTL properties, the same with no loan charges against this person, with the properties each showing the ownership now under a separate newly formed Limited company.
For example the buyer, Fred buys 666 Foot Road, then immediately sets up 666 Foot Road Management Limited (hereafter 666FRML), with Fred being the sole director, and then HM Land Registry showing the property under the ownership of 666FRML. Not only that, Fred has also set up a further Limited Management Company to manage all of the BTLs ( each in themselves a Limited company)
My questions are, why does Fred not purchase from the outset the property in the name of 666FRML, and what are both the legal implications, financial costs, tax implications in Fred's business plans.
The initial sales agreement being that completion should be prior to the 31 March, then when the buyer's bank failed to come up with the loan monies, the exchange of contract and completion date was extended, and extended, until today when we are no further advance than prior to 31 March.
My searches of this potential buyer, brings up several recently purchased BTL properties, the same with no loan charges against this person, with the properties each showing the ownership now under a separate newly formed Limited company.
For example the buyer, Fred buys 666 Foot Road, then immediately sets up 666 Foot Road Management Limited (hereafter 666FRML), with Fred being the sole director, and then HM Land Registry showing the property under the ownership of 666FRML. Not only that, Fred has also set up a further Limited Management Company to manage all of the BTLs ( each in themselves a Limited company)
My questions are, why does Fred not purchase from the outset the property in the name of 666FRML, and what are both the legal implications, financial costs, tax implications in Fred's business plans.
IMO. And Fred may prove me wrong. He's being a bit less clever than he thinks. If and when HMRC take a look at him he'll find that the legislation regarding SDLT on second homes contains a clause to mitigate precisely his 'clever' scheme of setting up a Ltd Co to buy each property to avoid the higher 2nd home levy.
Thank you for the replies.
I was interested in whether Fred initially buys the properties in his name, in order to make it easier to obtain the loan monies, and once obtained, sales contract completed, then transfers each property into an individual Limited company.
If the above was the case, would there not be a Charge against each property, with the loan company having some say on the "Limited" now showing titled ownership.
And whilst there possibly being no immediate CGT to address, does the change of titled ownership, not incur further, another lot of stamp duty?
I was interested in whether Fred initially buys the properties in his name, in order to make it easier to obtain the loan monies, and once obtained, sales contract completed, then transfers each property into an individual Limited company.
If the above was the case, would there not be a Charge against each property, with the loan company having some say on the "Limited" now showing titled ownership.
And whilst there possibly being no immediate CGT to address, does the change of titled ownership, not incur further, another lot of stamp duty?
The buyer attempted to complete before 31 March 2016, being before the increase in Stamp Duty. Then when he was unable to do the same, has offered the excuse that his bank came up late with the loan monies.
My searches on Duedil, has shown that the buyer/Fred created two (2) Limited companies, with each company being then named as the owner of a residential rental property. My searches on HM Land Registry show both properties, each having their own Limited Management Company, with no loan charges listed, shown.
Therefore in answer to your question, I can see no loan being listed against either the buyer's present home/flat, or against the above two (2) rental properties.
My searches on Duedil, has shown that the buyer/Fred created two (2) Limited companies, with each company being then named as the owner of a residential rental property. My searches on HM Land Registry show both properties, each having their own Limited Management Company, with no loan charges listed, shown.
Therefore in answer to your question, I can see no loan being listed against either the buyer's present home/flat, or against the above two (2) rental properties.
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