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Where Taxpayers and Advisers Meet

Selling BTL As Startup Capital For Property Business

nisiwi
Posts: 2
Joined: Mon Nov 05, 2018 5:25 pm

Selling BTL As Startup Capital For Property Business

Postby nisiwi » Mon Nov 05, 2018 5:32 pm

Hello Tax Experts,

I'm looking to establish a property investment company and will be using the equity in a high equity low yield BTL property to do that.
Can somebody advise what the most tax efficient method of selling the property and using the proceeds as startup capital for the business will be, please?

It's currently in my partner's name who is employed and a higher rate taxpayer and I've just finished full-time post-grad education, so currently not employed or paying income tax.
We both plan to be directors in the new property business.

Kind Regards,

Nic

AGoodman
Posts: 808
Joined: Fri May 16, 2014 3:47 pm

Re: Selling BTL As Startup Capital For Property Business

Postby AGoodman » Thu Nov 08, 2018 11:50 am

Nothing springs to mind. If you are married (or civil partners) the property or part of it can be transferred to you on a no gain/no loss basis to use your allowance and lower tax base but if not, it is probably just a case of paying the tax. At least CGT rates are currently low compared to 10/20 years ago.

someone
Posts: 377
Joined: Mon Feb 13, 2017 10:09 am

Re: Selling BTL As Startup Capital For Property Business

Postby someone » Sat Nov 10, 2018 5:37 pm

Nothing springs to mind. If you are married (or civil partners) the property or part of it can be transferred to you on a no gain/no loss basis to use your allowance and lower tax base but if not, it is probably just a case of paying the tax. At least CGT rates are currently low compared to 10/20 years ago.
And if you are not married and the sale is not imminent and there's PPR and lettings relief available then it might be worth transferring some of the property to you now to lock in some of those reliefs (I think they're both still available now) but you'll need to tread carefully as you could inadvertently crystalize a (taxable) gain and then end up selling the property at a loss if prices fall between now and the eventual sale. Even if they're not available, potentially your partner could make a 10K disposal to you now and then have another 10K available for the final sale next tax year. (Whether the tax savings you'd make will cover the costs of doing this, especially if there's a mortgage involved, is anybody's guess)

nisiwi
Posts: 2
Joined: Mon Nov 05, 2018 5:25 pm

Re: Selling BTL As Startup Capital For Property Business

Postby nisiwi » Mon Nov 12, 2018 11:42 am

Thank you both.
Looks like a simple sale is the best route forward given she's owned it for 18 years and lived in it for 9 there should be some decent relief from that.


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