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Where Taxpayers and Advisers Meet

Selling property to business timing issues

irvine322
Posts:1
Joined:Mon Nov 23, 2020 10:15 pm
Selling property to business timing issues

Postby irvine322 » Mon Nov 23, 2020 10:31 pm

Hi All, not 100% if this is right place but just looking for any thoughts on a fairly complex scenario. I'm a part qualified accountant so haven't seen the need to use accountant for tax affairs to date (been letting out property for 3 years now) - but considering it now.

Scenario is I planned to sell a BTL property from my personal name to my limited company on 1/12/19. I made my tenants aware of this upcoming change and asked them the start paying the rent into my business account from this date. I also changed some of the direct debits into my business account on this date. I didn't change the mortgage immediately as I thought it was about to be paid off.

For various reasons the transaction was delayed by 3 months (mainly due to solicitors) and didn't actually go through until 1/3/20. My question is how to treat the income/expenditure in this period - should it be through my personal name or my property business. Most of the actual transactions were through my business account (except the mortgage) but legally my personal named owned the property in this period. It is more tax efficient to go through my company so I would prefer this if possible - but clearly I want to use the correct approach.

I wondered about the idea of letting the property from myself to my business for this 3 month period (at a rent similar to the mortgage) - as this would deal with the tax problems in my personal name (income/expenditure would offset) and put the issue into my business (which would have the tenant income in & the bills). However clearly I am wondering if this is an acceptable thing to do and isn't any form of tax evasion etc.

I may have to consult an formal property tax expert - but thought I'd ask on here in case anyone could help. Thanks in advance if you have any ideas!!

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Selling property to business timing issues

Postby AGoodman » Thu Nov 26, 2020 10:33 am

I think it has to be personal income. Just having it paid to the company does not make it the company's income and I don't see how you can create a retrospective tenancy a year after the event.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Selling property to business timing issues

Postby bd6759 » Fri Nov 27, 2020 9:39 am

It depends on the reason for the delay. Conveyancing between connected persons is not an onerous task, so why did it take so long?

What does the sale contract say about the date of sale and delays?

It is possible for ownership to have transferred on 1/12/19 despite the delay.

Your problem is the mortgage. It’s not a company debt so it cannot claim the interest as a cost.


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