Gifting BTL property into a Limited Company, Stamp duty & CGT implications.

[Alexander RSN]

Hello everyone.

I'm looking for some advice from some experts if possible please!
My father is wishing to gift me a tenanted BTL property that has market value of £400k, however he just wants £100k from me to pay off his outstanding mortgage.

i can release the £100k equity from my current property to make the purchase, however i want to understand the Stamp duty implications, and how best to do this...

is the best approach to setup and incorporate the property into a limited company instead of a personal holding? (in the future i would like to grow a portfolio)

Should i purchase the property in the first instance, then gift to the limited company? Or should i invest the £100k into the company and then purchase the property (not sure how the gifting from my father would work in this instance, and the best approach to minimise stamp duty and CGT liabilities.)

any advice on this would be much appreciated.

many thanks in advance!

Alex

[maths]

The sale to you by father would give rise to a CGT charge on his part based on an assumed sale at market value (not £100K). Similarly if sale to a company you own.

If you already own any residential property there would be an SDLT charge on your part (3%).

As father is selling for less than market value he is in part making a gift for IHT. (a PET if sold to you; a chargeable transfer if sold to your company). Nil rate band should cover most of the gift.

Purchasing then gifting to your company gives rise to two lots of SDLT; two lots of CGT; two lots of IHT.

[SDLT Geek]

A transfer to a limited company “connected” to the individual is subject to SDLT on the market value of the property. The higher rates of SDLT would apply (with the extra 3%).

[billypiper]

mmmm

If you want the property in a ltd company the pitfall is that when it acquires it there is a 3% stamp duty surcharge on the market value.

You father may be subject to Capital Gains tax on it market value less cost. This will also occur if he gives you the property.

Your fathers gift of the property to you may incur Inheritance tax should he not survive 7 years.

Is there a reason why he wants you to have it

dennis@taxesclear.co.uk

[jerome.lane]

Depending on the values involved, personal circumstances and long term intentions, you and your father may wish to consider structuring this differently and potentially not pay any CGT or SDLT while still achieving the end goal. You should seek specific advice on this.