Updating post from Reddit.
I'm looking to buy a second BTL property and looking for advice, we have around 400k equity in one property, privately owned, fully paid off, was my wife's house now we both live in my house (also fully paid off) and rent hers out.
If purchasing another BTL we would prefer that in a ltd company, how would we move our other house into the BTL and what are the tax implications, I'm expecting stamp duty and possibly capital gains too
Your expectations are correct you are basically selling it to the company.
I appreciate the confirmation, thanks.
Would there be any benefit to putting it into a BTL without a mortgage?
Presumably we'd pay corp tax and then income tax on any money we take out. (Both higher rate tax payers)
You can remortgage and do what you like it’s transferring the existing one that’s going to incur fees. The higher rate tax is the killer so may well be worth the pain now for gain later. Speak to an accountant.
Yeah, I've got an appointment with my accountant next week, just getting some talking points and ideas, I think I've thought about most things a non accountant would consider, getting a professional's opinion is my next step.
I appreciate your response
Buying a new BTL in a LTD Company is simple and basic, often the best route if your not intending to live off the rent but to re-invest in the company. Ready to replace your main income when you come to retirement.
However, as the other poster said "transfering" is not as simple - your going to pay CGT and SDLT again, as well as requiring a new mortgage.
House is fully paid up, no mortgage so shouldn't need one, unless SDLT and CGT are massive, even then it would only be a small one if required
You can also take the view that your going to have to pay CGT "sometime anyway" you may as well pay it now. Plus LTD Company can be good for succession planning.
SDLT is subject to a higher rate, meaning that the standard SDLT rates have an additional 5% added to each bracket. You can verify this by using the government’s online calculator. It's important to note that this is an optional cost, so you need to calculate the break-even point to compare both options effectively and determine which route is the best choice for you, or when.
I've done some financial modelling, not really looking to take any cash out to be honest, just want to keep it all in there for a rainy day or until there's enough to reinvest again
Bear in mind Ltd Co mortgage rates aren’t as good if you do re-mortgage. Into Ltd will incur stamp duty and CGT on the transfer/sale. You will have a directors loan in credit for £x amount (property value) which you will be able to draw down on (tax free as it was your asset/cash initially) as cash flow allows. Re-mortgaging will allow you to take cash out sooner/re-invest in more property.
If you are not a higher rate tax payer at the moment then it’s a tougher call. If higher rate, it may make sense long term.
If you're not planning to expand to like 5+ houses then I'd just keep it in personal names.
Thanks, that's what it sounds like I'll try to do if I can make it work