Holding residential lettings in a company

18th March 2021

There has been an ongoing debate since the government started to reduce tax relief available on mortgage interest that having property in a company could be more beneficial.

 

In order to transfer the property from personal ownership there could be a CGT charge depending on the difference in value from when you bought it to the market value at the date of transfer. However the first £12,300 (2020/21) of any gains made by an individual is not taxed.

 

There would also usually be a stamp duty charge as you are changing the legal ownership of the property from your name to a Limited company. However with the recent extension of the stamp duty holiday to the end of June, is now the right time to make the transfer?

 

With the announcement that the government is increasing corporation tax from April 2023 to 25% for profits over £250k this may again put you off, but the 19% rate is remaining for profits below £50k and in a lot of cases the loss of the tax relief on interest has pushed profits to be taxed at 40% personally.

 

If you are unsure of where to hold your residential properties, please do get in touch for us to assess if a Limited company would be a better structure for you.

 

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