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  • Tax

    CGT swings and roundabouts?

    I have a plan but as my brain doesn't work well in a financial way I could use some advice

    Plan: I have a LTD company with one property in it (had it for 10 years) and I am thinking of selling one of my other properties (jointly owned with my wife) to the company.

    I would select one that would have a gain close to the annual £22k CGT free allowance (me and my wife) - I would loan the company the £120k (market value) to buy it.

    Benefit: we have created a tax free gain and retained the property.

    Con: we have tied up £120k that we could have used for something else like flipping a property or paying down some other BTL mortgages.  We could of course remortgage after 6 months in the company name and release perhaps 75% of our cash back to us.

    I set up the company originally to do this each year but was never sure if it made sense or not! Not sure if I am giving myself a lot of work for no real reason - probably swings & roundabouts as usual?

    Views much appreciated

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    If you have a larger capital gain you could also transfer 50% this financial year e.g. 4th April and 50% next year e.g. 6th April to make use of two year's capital gains tax allowance each taking you up to 44k CGT allowance. This is the approach we are taking this year to move a property within a new company.

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    Interesting!

    Are you borrowing within the ltd company or lending and creating a loan from you which you can draw tax free - I suppose if we are lending to our company we could charge a hefty interest rate but that may be counter productive - my brain hurts!!!

    I would be interested to know what kind of LTV you were getting and at what rate.

    Thanks

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