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  • Tax

    S24, CGT, LLCs and distressed LLs

    Hi all,

    I came across an LL selling a private property for S24 reasons. What I don't understand is the following: why don't private LLs sell their private properties to a limited company they create? I heard this is because of CGT, but if they sell to someone else they will also have CGT to pay, so why not create a limited company, bite the bullet and sell everything to their own company rather than that of someone else, since they should in any case pay CGT?

    Thanks!

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    Jean-Stéphane

    In A House Ltd

    RLAAS Accredited Landlord

    Maybe to raise capital to reduce the mortgages on the rest of their portfolio?

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    Hi JSS

    If the Landlord sells to their own limited company then they have CGT and SDLT to pay but no cash to do it with.  If instead they sell to another landlord they will receive cash from which they can pay the CGT they owe to HMRC.

    In my experience there are a lot of landlords who are either selling up or moving to a limited company without getting the facts of how the changes will affect them.  They are basically reacting to press reports without knowing the facts related to their own tax position.  

    Making decisions on that basis is terrible and anyone considering selling up or moving to a company needs to get the facts first. 

    Regards

    Nigel

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    Hi Nigel,

    Very clear, thanks!

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    Jean-Stéphane

    In A House Ltd

    RLAAS Accredited Landlord

    If a Laddlord sells to his own company he still has to pay the Full CGT if he has made a profit

    and don't forget its 28% if they are a higher rate tax payer and them most likely will be because of S24

    and they may need the funds to pay the Tax Bill

    I have been selling property to my company by the way of gifted equity

    average price of the property around 85K ish with no or little CGT because I have not made a gain

    but its still costing me in round figs 5k to do so and that's with no CGT

    Also I think a lot of landlords can see where this is going and may believe the S24 has a  big brother S24B

    I know I think S24B will come within 10 years

    You also have PRA regulation and some landlords could be trapped

    and some of us also think Rent Control could come too

    Being a landlord to day is not for the faint hearted

    Every one of us is different and a big mistake is to try and put things into a simple box

    Its far from simple in my opinion



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    Learn Change and Adapt ?????