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Hi, I don't want to break any laws so professional advice and from anyone who has experience would be appreciated.
I've a mortgage on a residnetial property that's gonna be completely paid off in a couple more years. Thing is, I have great rate on that prop that I can port but only if I sold the current one can it be ported to the new property. I was thinking if I can sell the current prop for a good price I might and that would remove the complications. It'd be a straightforward sell+buy scenario and keep the old mortgage rate. Here's the problem though. With Brexit prop prices are falling I may not be able to get a good sale price for the existing property. But if I sold it to my company and turned it into a holiday let, I could still port the mortgage rate to a new residential property.
Sorry this is so long-winded. I'm getting tired typing.
Now here's the question. Would I be breaking the law, commiting fraud, or any other laws if I sold a property that was say, valued at 450k to a company of which I was director for 250k? The numbers here are made up just to pain the picture. Would selling my home to my company well below the market value going to be a problem, legally?
Can anyone advise?
I am far from an experts but I have sold a lot of my own property into a company
first of all you cant keep the same Mortgage you have at present
If you were to go ahead with this you would need to sell your property to your new company
and most likely your company would need a new Lender
You would have all the costs of selling and buying back and the company would also pay stamp duty on the purchase
The new Company Mortgage would need a valuation and this would be the true value on the open market which you would have no control over
You could try and sell it at a lower value but HMRC would most likely look at it with a dim view
The route your thinking of taking is not one you should even think about with out taking advice first
I sold one property to my Company and the valuer increased the value which was not helpful
My advice would be sell it at its true value from day one if its to your own company
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
I checked with the bank today. I can keep my current mortgage rate, not the mortgage itself. It is ported to a new residential property which i buy as an individual. I appreciate your input. Thank you.
I think someone has to value it. But potentially it would be fraud as there is taxation to take into account. You have to pay capital gains tax on sale and stamp duty on purchase. The HMRC would investigate if it is a big enough discrepancy.
That's what I was afraid of.
A financial advisor was trying to promote the idea of selling to my private company but he did say have to get the property valued. There will be some.leeway but is important you make sure you cover your tracks. You might need to get three property evaluations. You might be able to shave 10% off it but as long as it is not glaring obvious you are trying to gain from a taxation point of view.
Due to the tax (twice) it would not be worth it for you. Limited companies are only good when you buy them initially.
Thanks. See all this information is really helpful. I'm exploring all avenues.
Well now with S24, I think from 2020 it will be no brainer to have BTL in own name. The costs of sale/purchase of BTL from individual to Ltd co will be less in the long term from the extra taxation that would be imposed to individuals on turnover rather than on profits
There are at least two reasons why you won't be able to do what you're suggesting:-
However, it IS possible to transfer ownership to your Ltd Co and not pay a deposit on the new 'purchase' ie. you personally 'gift' the equity to your Ltd Co as the 'deposit'. And currently we have rates sub 3.0% for this, so still pretty competitive. I should point out that you definitely need to take some proper tax advice, though. The potential for SDLT and CGT may well make the whole exercise too costly to consider.
No, perhaps I didn't describe my intention properly. I'll be porting the rate to another residential property which I buy as an individual. Ive checked with the bank. It's doable. The current property I sell to my company. The porting of the mortgage is to another resiential property I purchase as an individual. Sorry.
This is interesting. I'll look it up. Thanks.
Isn't equity-gifting only for individuals?