Property Portfolio via SPV Ltd Company

[Drei]

Admin can delete this please as I had the wrong information. Talked to accountant and everything has been explained.



Just in case anyone else wants this information.

As JHamp82 mentioned, one property sold to LTD makes you a home mover, it is down to the solicitor though, but only because there can be an overlap period which can push you to pay the highest tax, however they can also defer payment by up to 28 days to avoid that overlap.

[JHamp82]

I am hoping that someone may be able to shed some light whilst I am waiting on my accountant to provide the information, if they even know it.


If you sell your property to your LTD company in order to start a SPV Portfolio, you pay stamp duty tax at maximum rate and you can't use the property to live in it.

You can then use the equity in that property to buy additional properties, for which you pay stamp duty at maximum rate.

You can transfer the assets to your kids without tax inheritance and capital gain tax.

If you decide to move and buy a residential property, for stamp duty tax purpose and ONLY for that, they see you as having multiple properties (bare in mind that you don't actually own any properties that you can use since they are LTD Company assets which is separate from you), so for stamp duty ONLY purpose, they see you as having multiple properties and will charge you the maximum stamp duty tax rate... even though you are moving home and only have 1 property that you can use.


I don't get it... isn't this double taxing? If I am seen as owning multiple properties then why am I paying stamp duty to transfer them to the SPV LTD?



The information is hard to come by, actually I can't find it anywhere, hence my question, and when I started on this path my accountant didn't make things clear. I actually thought that once my main home is sold to a 3rd party having to pay stamp duty on the sale, ie the LTD Company, it becomes a company asset which I cannot use for personal benefits, thus I become a home mover and have to pay the smaller stamp duty tax. Doesn't that make sense?


Are you even allowed to let someone live in those properties at minimum rent, for example cover bills but pay no rent?

Seems to me that it is easier to never get married (that way one can own the company and the other the home you live in), and be really careful how you distribute your wealth and investment. You need to think major long term advantages, including what happens to your children when you die. Seems that you need to go to huge lengths to try and be within the lines but not get taxes to the point that it's not actually worth doing any investments or having any additional property.

If you sold your only property to a ltd company and you go to buy your own property then you will be classed as a home mover so although you won't pay higher rate stamp duty, you won't be paying first time buyer stamp duty.

For example if you buy a property worth 500k your stamp duty will be as follows:

First time buyer £10,000
Home mover £15,000
Additional property £30,000

I find below calculator to be useful but your query is more of a question for your solicitor i'd say.

https://www.stampdutycalculator.org.uk/



Thanks.

[Abbot]

You might want to get some professional advice as Business Property Relief is unlikely to apply in your scenario and therefore you won’t be able to avoid IHT.

[eek]

I don't get it... isn't this double taxing? If I am seen as owning multiple properties then why am I paying stamp duty to transfer them to the SPV LTD?

You are not your SPV - therefore there is a change of ownership of the initial property on which stamp duty would be required.

It's not written down because it's obvious once you remember you are not your limited company.

[Drei]

Please delete this post!!!!

Admin can delete this please as I had the wrong information. Talked to accountant and everything has been explained.


****
In case this post stays and is found by others searching for LTD owned properties.

In my case, I raised the question because the mortgage advisor said that you might be liable for highest tax, regardless if the property is in the company's name or not. This is because for stamp duty purposes you own the company thus own multiple properties (as in the property sold to the LTD and the new property you buy = 2). Which in my eye is extremely wrong, since you pay stamp duty for moving it to the LTD, and company assets cannot be used for personal benefits. In regards to selling to LTD and staying in the property, I believe that you do get a grace period of one or two months to allow you to move out. If you wanted to stay longer you may need to start paying rent, but that might cause issues with HMRC, even though how would they check...