Selling my property to my business

[BusinessMonkey]

Hi everyone. I'm not sure which category to put this in as it seems to touch on business, property and personal tax! I hope here is OK.

• I own 50% of a FHL flat with my Dad.  This is the only property I own.
• My company has cash in the bank sufficient to buy this 50% property share.
• I would like to buy a new property to live in (ideally taking advantage of 0% stamp duty).

Could I sell my 50% share of the FHL flat to my company at market value?  

Would I be liable for CGT on the sale to my company (bearing in mind that it is my only property)?

Would I/ my company owe any SDLT?

Is there any other tax/ costs that I have missed and would be liable to pay?

Perhaps the wrong forum for this question, but I wonder how one does this?  (I would like to think it was a paper exercise with forms going off to the Land Registr, but I wonder if I need a conveyancing solicitor to be involved?). The lease is presently in the name of my father and I. I guess that would need to be redone with my company name and my Dad.

I'm aware that my company would then have to pay corporation tax on any of the holiday rental income.

Would it make sense to restructure my business to have a holding company owning the trading company, and the FHL property? Thus keeping the property separate of the trading company.

Thanks

Simon

[pawncob]

Yes.
Yes.
Depends on the value.
Leasehold CGT calculations will probably require an accountant, unless you're au fait with rules.
If it's leasehold you'll need a solicitor.

[BusinessMonkey]

Hi Pawncob

Thank you very much for getting back to me.

Yes

So I would be liable to CGT. Interesting. I was under the impression that one doesn't pay CGT on their only property.

Depends on the value.

The value is approximately £325,000. So my half is £162,500.

Leasehold CGT calculations will probably require an accountant, unless you're au fait with rules.

Sounds like it.

If it's leasehold you'll need a solicitor.

I thought as much.

Thanks again!

[bd6759]

You don’t pay CGT if you sell the house you live in. The exemption rule refers to your only or main residence: residence meaning the house you reside in.

The company will pay 3% SDLT on the market value (under the current COVID rules).

If there is more that 50 years left on the lease, the CGT computation is fairly standard: selling price less costs.

[BusinessMonkey]

You don’t pay CGT if you sell the house you live in. The exemption rule refers to your only or main residence: residence meaning the house you reside in.

Thanks bd6579. I understand about the home being only the one you live in now. Thank you for that.

Am I right in saying that an FHL qualifies for Entrepreneur's Relief and therefore CGT would be reduced to 10% after the relief? Also, isn't there a £12,500 CGT allowance?

The property cost £250,000 7 years ago. It's now worth £325,000. Therefore my gain is £37,500. Can I take £12,500 off that, than apply Entrepreneur's relief to the remaining figure? IE £37,500-£12,500 = £25,000. 10% of that = £2,500?

The company will pay 3% SDLT on the market value (under the current COVID rules).

I understand. Thank you.

If there is more that 50 years left on the lease, the CGT computation is fairly standard: selling price less costs.

That is easy enough. £37,500 then? (Less any actual selling costs - such as solicitor fees, which I'd have to look up).

Thanks again for your help. I really appreciate it.

[bd6759]

ER can apply to FHL, assuming all the other conditions are met.