Prop development LTD company - rent out property

[landlord1234]

Hi,
I'd welcome any thoughts on this position.

I already have property rental income and pay personal income tax on that through self assessment.

I'm also sole director of a small property development company. The business model has been to purchase run down residential properties, do them up 'homes under the hammer style' and sell for a profit. This has worked ok for a few years now, the company accounts treat the properties as stock and it has made modest profits and paid corporation tax.

The company and I both remain solvent. However I am thinking of closing the LTD company in an orderly fashion in the current market. The SDLT charges and Council Tax changes make the business model much less attractive.

I now find myself in a situation where the company owns one developed property which was struggling to sell before COVID and I suspect the situation will not improve in the near future. I am therefore considering renting out the property.

There is a director's loan to the company lower than the marketed price of the property and more or less equal to the value I'd expect to achieve in the current COVID environment.

Ideally I'd like to transfer the property out of the company to myself at market value and then rent it out, but the SDLT 3% premium makes this option unpalatable.

So, can the LTD company , which currently treats the property as trading stock generate rental income from that property before selling it at some point in the future should the market improve ?

I'm sure it can . Maybe the question should be 'How can ?' and are there any pitfalls I should be aware of.

Thanks

[robbob]

So, can the LTD company , which currently treats the property as trading stock generate rental income from that property before selling it at some point in the future should the market improve ?

I'm sure it can . Maybe the question should be 'How can ?' and are there any pitfalls I should be aware of.

yes thats fine it be done you should check with your current accountant what the tax implications for the change are , main one is to try and ensure there are no losses that will be unutilsed if you are paying tax on profits elsewhere within the company unless its unavoidable:)