Moving Property to Ltd Company

[WinkleHoff]

Hi All,

Not sure if this is one for Finance or Business forums, but thought I'd start here.

For a whole host of reasons (too numerous to list), I am seeking to set up an SPV which will own my current property. The plan is that my main company will own the SPV and will provide the cash which will form the deposit needed to obtain a corporate BTL mortgage. Or alternatively, if not owned by the parent company, then there will be an intercompany loan arrangement from company to A to company B. I'll be speaking to my accountant on this structure early in January. I am anticipating that I will likely need to provide some form of personal guarantee on this (or I would hope the parent company would).

I would be grateful for any advice or insight from anyone who has done this before.

Many thanks.

[isleofthorns]

1 - I'd use a separate SPV, not a subsidiary. The non-trading nature can be an issue. Also be aware you'll likely create associated companies either way which can have an effect depending on the profit levels of your trading business
2 - you say it's your "own" property? Is this somewhere you intend to live in or let out? If the former you need to be careful of additional taxes for personal properties held by a company. Can't recall the limits off hand but you can google it.
3 - commercial BTL lenders will likely need a PG.
4 - inter company loans for the deposit are OK, but should be on commercial terms

[Puzzles]

I would see what the interest rates are like between the two options, also if you sell the property you have to pay corp tax which could be 25% then another chunk to get it out the company and into your hands.

[LooneyTunes]

All of mine are in an SPV in a group structure.

Don’t forget the transaction costs associated with getting them in there. SDLT (at the +3% rate) being the main one.

[Eric Mc]

Does the OP intend to live in the property he wants to place in a limited company?

[WinkleHoff]

Hi All, thanks for the responses. No, we won't be living here. I am going to be buying another main residence personally, and holding much current house in an SPV as a buy to let. So SPV becomes buyer at market rate.

I'm not sure how long I will hold the property in the SPV, currently doing some projections. If I liquidate the asset, the cash I will drop in to SIPP.

Thanks.

Edited by WinkleHoff on Tuesday 24th December 14:01

[Eric Mc]

Beware of the various Capital Gains Tax complications this situation will create.

[WinkleHoff]

Eric Mc said:

Beware of the various Capital Gains Tax complications this situation will create.

Thanks. If I'm disposing of my only residence is CGT not relieved?

[isleofthorns]

LooneyTunes said:

All of mine are in an SPV in a group structure.
.

worth keeping an eye on the balance of trade / investment this causes, group or not. if the proportion of non-trading assets / income are >50% then the effects wrt BPR and IHT can be substantial

[LooneyTunes]

isleofthorns said:

LooneyTunes said:

All of mine are in an SPV in a group structure.
.

worth keeping an eye on the balance of trade / investment this causes, group or not. if the proportion of non-trading assets / income are >50% then the effects wrt BPR and IHT can be substantial

A good point, but we should be fine with those.