BTL's in Limited Company
Discussion
Hi all,
I'm looking for some advice from the collective PH wisdom.
I currently own three BTL properties in Scotland, two outright and one with a small BTL mortgage. How would I go about transferring these to a Ltd Co? Setting up the Ltd Co isn't an issue but I'm unclear on how to transfer ownership from myself to my Ltd Co. Is this as simple as instructing a solicitor to do this? Would I need to pay stamp duty (land tax) on the transfer of ownership from me to my Ltd Co?
All advice gratefully received.
I'm looking for some advice from the collective PH wisdom.
I currently own three BTL properties in Scotland, two outright and one with a small BTL mortgage. How would I go about transferring these to a Ltd Co? Setting up the Ltd Co isn't an issue but I'm unclear on how to transfer ownership from myself to my Ltd Co. Is this as simple as instructing a solicitor to do this? Would I need to pay stamp duty (land tax) on the transfer of ownership from me to my Ltd Co?
All advice gratefully received.
Not sure if the rules differ in Scotland but in England yes you would just instruct a solicitor. You would be the seller and your ltd co would be the buyer so you would sign both selling and buying documents. There would be potential capital gains tax for you to pay on profits and there would be additional rate stamp duty for your ltd co to pay.
Edited to add:
I currently own 1 BTL in a personal capacity and am in the process of buying a second through a LTD co. All future BTL will be through the company but it’s not financially viable for me to sell my existing one to the company.
Edited to add:
I currently own 1 BTL in a personal capacity and am in the process of buying a second through a LTD co. All future BTL will be through the company but it’s not financially viable for me to sell my existing one to the company.
JapanRed said:
Not sure if the rules differ in Scotland but in England yes you would just instruct a solicitor. You would be the seller and your ltd co would be the buyer so you would sign both selling and buying documents. There would be potential capital gains tax for you to pay on profits and there would be additional rate stamp duty for your ltd co to pay.
Edited to add:
I currently own 1 BTL in a personal capacity and am in the process of buying a second through a LTD co. All future BTL will be through the company but it’s not financially viable for me to sell my existing one to the company.
Thanks for the heads up on CGT and SDTL. For my properties, the CGT will be minimal and may well be less than the annual allowance. I do need to factor in the stamp duty though, it might still be worth taking the hit and transferring to Ltd Co.Edited to add:
I currently own 1 BTL in a personal capacity and am in the process of buying a second through a LTD co. All future BTL will be through the company but it’s not financially viable for me to sell my existing one to the company.
“
Lack of knowledge but what are the benefits of running a BTL through a LTD Co”
Mortgage interest being a legitimate business cost is the principle one these days since the changes to B2L tax rules. Profits can be paid out of company as dividends.
There are probably others.
Mortgages are more expensive for a LTD company tho - think it’s classed as a business loan.
Lack of knowledge but what are the benefits of running a BTL through a LTD Co”
Mortgage interest being a legitimate business cost is the principle one these days since the changes to B2L tax rules. Profits can be paid out of company as dividends.
There are probably others.
Mortgages are more expensive for a LTD company tho - think it’s classed as a business loan.
AdamsDad said:
... transfer of ownership to son in the future should be easier/cheaper
What are the difficulties? For those you have no mortgage on can't you just gift them to your son and provided you live 7 years then no tax? Or do you have to pay CGT on a BTL at the time you gift it ?MikeStroud said:
AdamsDad said:
... transfer of ownership to son in the future should be easier/cheaper
What are the difficulties? For those you have no mortgage on can't you just gift them to your son and provided you live 7 years then no tax? Or do you have to pay CGT on a BTL at the time you gift it ?thekingisdead said:
“
Mortgages are more expensive for a LTD company tho - think it’s classed as a business loan.
Quoted to emphasise the mortgage point, as if the OP still needs one then getting a LTD mortgage would need to be considered.Mortgages are more expensive for a LTD company tho - think it’s classed as a business loan.
The other big LTD benefit that people often don’t seem to consider is the ability to change the point in time at which company money becomes personal money. There can be big differences in tax if you get hit with income tax whilst still working vs when retired.
Depending on value of the portfolio, if you’re doing it in order to transfer to next generation then you might want to look at ways to structure it other than a simple LTD in your name. Considering things like owns the shares, how you get the money in, etc can sometimes make it more efficient in the long run. Not worth the upfront cost if you’re looking at a small number of cheaper properties but for larger/more expensive portfolios it’s worth getting some proper advice.
LooneyTunes said:
Quoted to emphasise the mortgage point, as if the OP still needs one then getting a LTD mortgage would need to be considered.
The other big LTD benefit that people often don’t seem to consider is the ability to change the point in time at which company money becomes personal money. There can be big differences in tax if you get hit with income tax whilst still working vs when retired.
Depending on value of the portfolio, if you’re doing it in order to transfer to next generation then you might want to look at ways to structure it other than a simple LTD in your name. Considering things like owns the shares, how you get the money in, etc can sometimes make it more efficient in the long run. Not worth the upfront cost if you’re looking at a small number of cheaper properties but for larger/more expensive portfolios it’s worth getting some proper advice.
Thanks LooneyTunes,The other big LTD benefit that people often don’t seem to consider is the ability to change the point in time at which company money becomes personal money. There can be big differences in tax if you get hit with income tax whilst still working vs when retired.
Depending on value of the portfolio, if you’re doing it in order to transfer to next generation then you might want to look at ways to structure it other than a simple LTD in your name. Considering things like owns the shares, how you get the money in, etc can sometimes make it more efficient in the long run. Not worth the upfront cost if you’re looking at a small number of cheaper properties but for larger/more expensive portfolios it’s worth getting some proper advice.
At the moment, it's just three relatively cheap properties (total value just over £300k, rental income £1800 pcm) but I have reached out to a tax planner for some professional advice.
At some point in the future, I may look to change our home from residential to BTL and buy a new home. At that point, our house would also transfer to the company. The current value is £400k.
Great point about income in retirement, at that stage, we plan to hand it over to our son. We're not looking to generate an income at any point, any profit made will be used to overpay the mortgage or buy another BTL.
Any idea where to start looking for a Ltd mortgage?
AdamsDad said:
Thanks LooneyTunes,
At the moment, it's just three relatively cheap properties (total value just over £300k, rental income £1800 pcm) but I have reached out to a tax planner for some professional advice.
At some point in the future, I may look to change our home from residential to BTL and buy a new home. At that point, our house would also transfer to the company. The current value is £400k.
Great point about income in retirement, at that stage, we plan to hand it over to our son. We're not looking to generate an income at any point, any profit made will be used to overpay the mortgage or buy another BTL.
Any idea where to start looking for a Ltd mortgage?
I am sure that Sarnie (member on here who is a mortgage advisor) said he could help on another thread. Maybe give him a shout?At the moment, it's just three relatively cheap properties (total value just over £300k, rental income £1800 pcm) but I have reached out to a tax planner for some professional advice.
At some point in the future, I may look to change our home from residential to BTL and buy a new home. At that point, our house would also transfer to the company. The current value is £400k.
Great point about income in retirement, at that stage, we plan to hand it over to our son. We're not looking to generate an income at any point, any profit made will be used to overpay the mortgage or buy another BTL.
Any idea where to start looking for a Ltd mortgage?
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