To develop in my own name or a company ?

by **marcus.jeffries** on Mon Sep 13, 2010 12:26 pm

I would be very grateful for any advice about whether I should change ownership of a house I own, to a company, before I start building another house on the site.
It is not my PPR. I bought a 2 bed house in my own name recently for £200k and have obtained planning permission to build another small house in its garden.The renovation cost of this house is £25k plus the new house build cost of about £75k.There might be a theoretical profit of £100k if I sold both after completing the works.I dont necessarily have to.
I have never done this before and am not a builder.
Q1. Should I form a company to do the development?Why?
Q2. If I sold one or both of the houses in future, or gave the principal house now or next year to my 17 year old daughter, (18 next July), who does not own a property, what tax would I pay,and on what valuation, before or after the work.Would she pay no CGT on a house I gave her as her PPR if she sold in future?

I own 2 other buy to let properties purchased last year in my own name and could roll these into a company if it was beneficial.
I am 59 and will retire next year, which is why I bought these as a future source of income.The 2 buy to lets are funded by mortgage, the house I am developing has no borrowing.
I could sell or rent out either the refurbished or new propery, if it helped avoid any income tax or CGT on the development I am undertaking by deferring a sale.
Any thoughts or suggestions will be very gratefully received, as it is bad enough trying to design and build, without thinking about what to do with them after!
Thank you.
Marcus.

by **deltaforce1** on Tue Dec 13, 2011 6:55 pm

Hi Marcus,

My position is simular to what yours was. I am looking for the same advice. How did you end up developing, through company or in your own name? Reasons?

by **Incredulum** on Wed Dec 14, 2011 7:49 pm

The following I should GENERALLY expect to be true.

If you are buying to re-sell then you should buy into a company.

If you already own it, then you will have to pay SDLT to get it into the company; this will affect your decision.

If you are buying to hold, then you should not use a company.