Land transffering to Limited Company

[170872]

Hello, I have a question and hope someone can share some light.

I have a house with large land and plan to set up a Limited company and transfer the land into the Limited company and build property in it. We do not have any mortgage.

The land will be transferred at £120K. In the Limited company there will be two directors me and my wife.

I understand there will be no Stamp Duty. Will there be Capital Gain and any other tax implications that we need to be aware of before we go ahead.

Thanks

[bd6759]

SDLT may be payable. It depends on the value of the land. You will need to establish that first.

CGT depends on how much land there is with your house. If it is more than 0.5 hectare then the disposal might not be wholly covered by residence relief.

[AdamS93]

I can't see why there would be no SDLT payable since you are transferring the land to a limited company the surcharge is very likely to apply.

Also, don't just assume it is CGT you will be subject to. Have a look at the transactions in land rules, you may be subject to income tax and national insurance on the 'development value of the land'.

To be perfectly honest, I would seriously consider why to think transferring the land to the company is beneficial at all - double taxation on profit extraction and when you sell the property, potentially ATED, paying for proeprty revaluations on a regular basis to comply with FRS, indexation relief being frozen from Jan 2018 just to name a few.

Holding property in a ltd company is for landlords with large portfolios that are highly geared.

There are also VAT implications depending on what you plan on doing with the company not to mention IHT considerations.