Moving properties into a LTD COMPANY from your PERSONAL NAME! Everything you need to know!
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- čas přidán 5. 07. 2024
- Moving property from your personal name to a Buy-to-let Limited Company is a challenge for a lot of people because they don't know where to begin. A lot of property investors start buying property investments in their personal names then quickly realise that buying in a LTD company is a more tax efficient way to build build a property investment portfolio.
After the "Should you buy in an ltd company" video I was undated with questions asking about what happens when you move properties from your personal name into a buy to let limited company.
Brilliant video Jamie, no waffle and very direct. Thank you.
My pleasure!
Really good and informative video Jamie! I’ve been mulling this situation myself and you’ve helped me make a decision.
Glad I could help!
Honestly Jamie, I can’t thank you enough for your videos 🙏🏻 Every time I have a question I find the answers I’m looking for on your channel. It’s just so helpful!
No problem at all jade. Really glad they’re helping!
I like the fact you said "This is a learning for both of us" very humble. You are clearly very knowledgeable on the subject
Thanks Sarma!
Best uk real estate property channel on CZcams ✌🏻
Ah thanks so much, really glad you're getting value!
Really interesting video, thanks Jamie. I've just started a Limited company to buy property with but was very unsure how it worked transferring my current buy to let from my name to the limited company. Thanks for making it so clear and understandable
Hi Jamie
Can I sell my main residential home to my own property company and take that money to buy another residential home? Do I pay capital growth tax I believe I don’t because my main residential house
@@Thekamalgurung I imagine that you can sell your own home to anybody you like. It would have to be at a fair market value. What you do with your sales receipts is your business.
Solid advice. Thank you!
Every accountant I have employed over the past 40 years is useless at explaining their actions. It’s like they don’t want you to know. Your videos have answered so many questions I have right now. I am looking to move 6 properties into my ltd company that I have personal mortgages on. My plan was to pay off the outstanding mortgages and transfer the properties into the ltd company. Armed with the information I have learnt from your channel I can come up with a plan with my accountant as to how I move forward in the most tax efficient way. Ultimately I am looking for the most tax efficient way of dealing with CGT if I sell my portfolio. Or sell the company with its assets and claim entrepreneur relief.
Great Video Jamie thank you, do you know if you can borrow more / easier to leverage with an ltd, example if someone transferred 6-7 properties from personal name to a company and wanted to do bigger projects such as development would a company be easier to get more money borrowed if the company now has 'assets'? hope this question makes sense, cheers
also, with this scenario would the best scenario you think be a llp if person had someone else to help
Brilliant video Jamie. Will need to look at an LLP
Glad I could help
I really do love your videos! My parents have a substantial property portfolio so I am looking into the same path. They say “it’s not like it used to be” continuously. I am a 40% tax bracket earner already so will be looking to buy renovate sell. Suffer the big hit initially with the first then use this money to set up a ltd company and buy in that direct rather than personal to transfer (Ltd buy from myself). Not as an adviser but as an opinion do you think this is the best method. I don’t think there’s many more of your videos for me to watch 😅 keep them coming! 😁
More coming soon!
Hi Jamie, I've been watching many of your videos with interest. Do you have a video on transferring properties into an LLP partnership 🤔
Hi Jamie very good video. I am more interested in the subject of transfer. Can you please explain a little more on this .
Thanks very much. Sure, I'll add it to the video list!
Great video Jamie.
One point of correction is that limited companies don't pay CGT - only corporation tax. So if the company sold a house for £40,000 more than they paid for it (after all costs) then the company would pay corporation tax on the extra £40,000 profit - not CGT.
Only individuals get the benefit of the CGT allowance (currently £12,300 as you say).
I think, but I am not certain, that if the company uses the £40,000 profit to reinvest in another property, then the company can benefit from "roll over relief" and so avoid (or at least defer) paying the corporation tax on the £40,000 profit.
Spot on mate. I was talking about if you sell it into the company from personal name
@@JamieYork Hi Jamie, great vids mate. What about if I only own one house in my personal name and I sell it to my limited company, isn’t the CGT only if I own more than 1 property? Cheers, sam
I think that you have to roll over the whole of the sales value, not just the profit element.
With the pensions contribution allowance now at £60,000, this could be considered as a payment by the company to reduce the corporation tax bill.
@@samuelgregson5336 if the house is your residence, you don't have to pay CGT. If it has been rented out, CGT applies
But not sure whether you can rollover the proceeds in a property investment...I strongly suspect not now.
Good man, thank you😊👍
Hi, Thanks much for sharing the knowledge. We are thinking to get our first BTL and I am doing research what is better. I am close to 40% tax range and my wife is lower rate tax payer. What do you see is better for us. Own name joint mortgage as she is in low rate and it will work out balance despite me going at 40% tax rate or setup Ltd for this. We are thinking couple of properties but obviously need to see how it goes and build up slowly in longer term. In my head I am thinking we should buy first 1 or 2 under own name and then go Ltd but giving majority advicing on Ltd from start I am confused. I would be greatful if you can advise which route should I take. Thanks much.
Brilliant information
Appreciate it!
Hi Jamie. Love your smart whiteboard! Do you want to share the Brand and Model so I can ask Santa to bring me one? 🎅🎁🎄
One of the reasons I moved a personal BTL to my ltd was to get my deposit money back on top of the gain the house had made. This money can then be lent back to the ltd. at a justifiable 4% which is a deductible expense to the ltd. and a 20% income to me.
Just another column to add to the spreadsheet......
Could work out quite nicely if you run the numbers.
Sounds good!
Hi have a question, can you actually use your deposit or need to stay in limited company?
Hi Jamie, hope you can help. I just bought an additional property and affected by the stamp duty tax paying 9k. I been advised after a year I can move my current property which I been renting out which i paid 100k back in 2017 to a LTD would I be able to get the full tax refunded? Is it worth staying as a limited company in the long term? Cheers
Great video. What about the company taking a loan from me to purchase the property through a bridging loan. I.e there is no CGT as you sell the property in order to repay the loan.
Do you get to claim the bills for your property as claimable expenses?
I have been looking into partnership. Apparently you can own a property on your woen name, but you can share the profit in accordance to the time that was invested into running a business. There are also implications for inheritance tax, etc. I am still struggling to find an accountant that would know what they are talking about....
There are some amazing accountant out there which are perfect for this!
I've been advised to max out my personal income before incorporation. So two personal name and then the third is in ltd company
If that's been advised they they know best
If you put each property in its own limited company, with say a holding company, then when you dispose of a property you can have the company sell it, or you could sell the company. You wont be able to set off losses against profits and people are often reluctant to buy companies, since you buy all the risks of the company back to incorporation, but the purchaser will probably get a stamp duty benefit since they are buying shares, not property. Another thing to think about.
We were advised if doing a BRRR then personal name is better as tax is not realised on value increase until selling therefore the money released you can do whatever you want with and costs were lower too. If standard BTL without much value uplift potential then LTD CO.
The realisation of value for BRR is the same thing in a company 😊
Capital Gains Tax is only due on selling. If you hold onto the properties until death, then no CGT would ever be due.
However, that is not the point of the video! The issue is that if you have "too much" income from properties you hold, you become a 40% Income Tax payer, but Section 24 limits your mortgage interest Tax credit to just 20% regardless. There is no such restriction for properti3s held in a company structure,
I'm new in this BTL. Only ve 1 property to let out.
If u as a couple, employed, is it best to do 2 BTL in personal name first. Once u r close to reaching 40% tax between u, then Open Ltd company and buy yr third BTL onwards on yr Ltd company? Saves the cost of transferring later?
Exactly
Hi Jamie, thanks for your video. It’s bittersweet as I think it’s answered my question unfortunately it’s not the answer I want ☹️
I just tickle the 40% tax bracket but then my two rental properties kick me way over the line. They were both meant to be my pension but with 40% tax and higher mortgages I’m losing money every month 🤦♂️
How can that be right. Looks like it will cost a small fortune to transfer them into a limited company with money I don’t have.
Are tickling the 40% rate from a wage or a salary or a self-employed income? If any of these, then you could have nett relevant earnings that you could reduce by a pension contribution. With the personal pension contribution allowance now £60,000pa, you might be able to make yourself a 20% Income Tax payer. Speak to your accountant.
Great content Jamie. Its nice to see someone practice what they preach & can back it up. Unlike most of the other so called specialist property gurus on youtube..
Could you possibly do a video on purchasing a property with a sitting tenant.?
Absolutely
This may sound like a syupid question but if I have 2 properties that have now pushed me 20k into the 40% tax bracket and i wanted to transfer them to a brand new ltd company, how would thenltd company pay me?
I am confused on that part.
Hi Jamie, if all of my properties are commercial I won’t pay any stamp duty is that correct? Thanks.
LLP Hybid structure specialist Chris Bailey of the Bailey Accountanting Group. Cheers Jackson (Toyan is trying to get us houses in APG)
Ohhhh amazing. So glad to have you on board 💪
❤️ On point
Thanks Ahmed!
@@JamieYork can you transfer existing property into a limited company once your about to hit higher tax bracket
If you've owned your property for a number of years you can minimise your CGT by ensuring you get a retrospective valuation on your property in 2017 when the rules changed. Sharing advice from my tax advisor. 👍
Great tip!
What matters is the value at the date of the transfer, it doesn't matter what the value was in 2017.
Is it not true that if you have 1 commercial property in your portfolio you can incorporate the whole portfolio without having to "sell" to your company? Heard that few weeks back....im not in that position so didn't really look into it further ....
Not what I'm aware of!
This is something that really interests me however, being in Scotland, different rules apply :-(
What about refinancing differences between personal name and ltd company.
Great suggestion for another video!
@@JamieYork your very welcome. I imagine refinancing through ltd company the interest rate is higher than personal. Also if its a HMO.
@@roguewon3427Approx Mar 2021 i got 3.59% 5yr fixed for up to 5 people student let, single AST, in a ltd co. with very limited personal income.
The equivalent personal rate was 1.69%.
Really takes out the benefit.
Scenario. Individual A) owns a property out right and after 1 year adds Individual B) they just pay land registry fee and lawyer fee to add them onto the title right? If then Individual A) removes themselves a year later i am guessing there is no stamp duty or cgt owed. Now lets say A) is a person and B) is a ltd Partnership, would that be a way to transfer personal properties from personal to Ltd accounts?
Nice thinking but it doesn’t work in reality for several reasons. The biggest is that you need a genuine commercial reason for doing that. Not just tax savings
If you own your property outright and just want to move it to a ltd company, is there any additional costs?
Hi Jamie, great video as always. I have 8 BTL's in my own name and due to section 24 i'm hovering around the 40% tax bracket and could just do to reduse it by a few thousand. Accountant advised a LTD and I've set that up and bought 2 properties in there and just using it as a savings pot to eventually re-invest. Option 1 is to sell one in my name to the LTD, I have an unincumbered one so that would be the least hassle. Option 2 is one i've never come across before and it's to allow the LTD to manage my own properties by collecting the rents, deducting 15% for a management fee, then distributing the difference back to me. This reduced payment to me would be 40k which would keep me under the 40% tax threshold, job done, allowing me leway for future rent increases etc. I would still pay all the bills and maintenance as I did before and claim the mortgage Interest tax relief. I get that the LTD would pay corporation tax on the management fee but that would be fair enough. Option 2 sounds ideal but just too good to be true, what do you think and what would you do?
Can you tell me what is mortgage interest tax relief?
@@Cappaghgrove hi Lee, so now section 24 is in full flow, having property in your own name you can no longer deduct your mortgage interest as a cost against your income. You now claim 20% of your total mortgage interest off your final tax bill as a mortgage tax relief.
@@johnhaworth6850 thank you John..and does it matter if I pay 20 or 40 % income tax?
@@Cappaghgrove The 20% tax credit is always 20% irrespective of your marginal tax rate.
Sorry, don't want to get too personal but how low is the gross rent on each for you to hover around the 40% bracket after S24 was implemented?
How and where would I find trusted trades people in Liverpool, to do up a property, as I live in Leicester. Thanks
I've got a video about this coming up!
That would be nice. As might purchasing a property there soon. Thank you
Jamie, if it's going to cost you £7,256 EACH for 4-5 properties (£36,280 total), why wouldn't you integrate into a LTD company from the start? Why is 6 properties onwards the magic number, and surely 6 properties in Chelsea to 6 in Salford are completely different kettles of fish. Great content though and I'm on my journey to build my property portfolio, however this grey area is one I'm struggling with hmmmmm
He was using rule of thumb! Clearly, each person's situation is unique and everyone needs specific personal Tax advice.
The biggest question on this topic is for me; If I own a HMO on my personal name and want to refinance it to scale my portfolio,
is it possible to do debt the money from my ltd ?
Hey Saltuk, I'd need more info to know exactly what you mean. You can't refinance a property which is in your personal name into a LTD company without transferring ownership. Hope this helps!
If you have a HMO, it's better to keep it in your personal name, and rebrand it as a "serviced/furnished hoilday accomodation." Just to be clear, I'm also not a legal attorney specialising in tax planning and I don't own any HMOs; I only have a B2L portfolio. However, even if your HMO is in a city, it can still be viewed as a seviced hoilday let and there are many tax deductions and mortgage benefits to this structure. I suggest you contact a firm of solicitor or a consulting firm specialising in this. There will be fees involved, but it will almost certainly be a far more tax efficient structure than moving it from your personal name to a LTD Co
Jamie,
Get advised before you carry out your plan of transferring your personally owned properties into limited companies one at a time. Why? My understanding is that ALL of those personally held houses form ONE business, so you cannot pick and choose which ones to transfer and which ones not to transfer. Anyway, with CGT allowances falling, it does not appear worthwhile.
It depends on the individual circumstances and other factors too
@@JamieYorkYes, that is for sure.
Also, remember that once in the limited company, you face the problem of the extraction of profits from the company! Pay yourself a salary and you could get hit for Income Tax and NI. Pay yourself a dividend and you could face Income Tax charges. Oh, and those are after paying Corporation Tax! However, the profits of your businesses held in your name are yours and you only pay Income Tax the once.
The downside is that selling any of your properties in your name could result in a CGT charge, alas. Whereas, selling a company held property could result in a Corporation Tax charge, which is often much easier to mitigate, say with a payment contribution into your pension (say SIPP or SSAS).
Hi , I have a land in my name and I was asked by a developer if I want to sell this based on obtaining a planning application for 3 houses. The problem is that if he obtains this I will have a profit of £540.000 . I believe it will be beter to transfer this land better to a LTD in order to avoid to pay to much taxes as I want to purchase some BTL with this money. Also I have 5 children which are minors ...Can I add them on the LTD before this transfer ? Thank you , I hope you can help me with an answer.
Sounds like some sweet profit! You can add your kids into the limited company at any point
Me and my other half are wanting to rent out our current home we live in and because it’s in both our names it’s 40 percent tax is there any way around this
Married couples can make a declaration to split the income unequally if that's what your issue is.
Jamie, many mortgage brokers don't know how to apply for a mortgage for a limited company. Could you recommend some brokers to us?
I've just been told that you can reinvest all the money and buy another house on the company's name after paying corporation tax. Is this true Jamie?
After paying 100%, yes :)
Paying tax. Yes
@@JamieYork Thanks a lot! You're outstanding.
Please Jamie, can a limited company get a mortgage from a Bank?
Yes
Thanks very much
Would I be able to gift a deposit to the ltd company when selling the property from my personal name ?
I have been wondering this too.
Out of interest why wouldn't you want to loan the money to your ltd as a director instead?
We help and have helped many property investors on incorporation from their personal name via partnership to limited company no CGT or SDLT. You need property tax advisors and legal support depending on your circumstances to see if it is right for you
Completely agree 💪
@@JamieYork , huge benefits people miss is the capital gain rebasing and the restructuring of the capital loan account which is huge.
Like the video and thanks for sharing 👍
Can you provide more info please
@@sajidpatel5985 what exactly would you like more information on?
@@zeerazaq6755 regarding putting properties under Ltd from personal name so u don’t have to pay sdlt and cgt
quick question, can i buy a property in a LTD and live in it myself my pay rent to my own limited company ?
From an HMRC perspective as long as you pay a fair market rent then it wouldn't be a problem at all.
If you pay a reduced rent it would be a BIK (benefit in kind) and class as a taxable income.
Not sure if the mortgage lender would approve but what they don't know can't hurt them.
Not sure why you'd ever want to do this by the way. Mortgages and fees will cost a lot more with a BTL especially in a limited Company and also there's a huge capital gains cost to consider 20, 30 or 40 years down the line.......
@@1evilpie i was thinking buying a property Below market value, i could reno it and live in it and save money at the same time refinance buy another property live in the second home rent the first property out and just repeat the process ?
@@UltraJamZHD The FCA imposes different rules on banks when they lend residential mortgages than when they lend BTL mortgages.
For this reason banks consider that a person who applies for a BTL loan but then lives in the property themselves or allows a family member to live in the property to have committed a major breach in their mortgage conditions- allowing the bank to apply to repossess the property even if payments are up to date. The bank might even regard you as having committed mortgage fraud and create a CIFAS record for you, in which case you would struggle to get a mortgage in future in the UK, S every lender checks the CIFAS file before deciding to lend.
No need for me with these comment! Great job
The capital gains in transfer to the Company, is washed out via shares. The ownership is turned into shares and unless you die or sell shares, you don't need to pay the capital gains. The transfer is the harder part to prove (as stated). HMRC are a real pain in the ass these days. In my grandfather's and even my father's times, you could put so much more through the business. Also everyone doing this does not want to refinance until after the transfer, to wash out as much as possible. Golden rule - debt liability CANNOT be higher than the capital value across the portfolio you have. This is calculated by looking across the entire portfolio owned, not at individual properties.
Exactly that mate. It’s a pain the arse isn’t it!!!
@@JamieYork They are relentless sir Jamie, absolutely relentless. I almost feel (no correction - I DO feel) tense in business today in a way I didn't used to and I am 'only' 41 (a young looking one of course!) but seriously... it is becoming Italian with the amount of 'door-knocking' into your affairs. I hate how state controlled and invasive business is becoming. If I was left alone, I could definitely create more jobs and opportunity for others. The noose of bureaucracy!
Time will tell… but a rebellion is on the way 😛
How do I transfer a property that's been bought through a limited company to myself as my circumstances have now changed.
The company sells it to you!
@johnporcella2375 Thank you, would I have to pay stamp duty again?
@@reconforsales7708Yes.
I noticed companies house is about to strike off your company aspire properties for not submitting your taxes on time. Im not assuming any wrongdoing, its a ltd company so the records and status are public. Just wondering what your reasoning is for doing this?
Thanks for flagging… I best get on the phone to the accountant!
It isn't a 14% return on investment because the money hasn't been invested, it's been spent on taxes and fees so you no longer have it. Effectively, you only start getting a 14% return after 7 years. Is it still worthwhile?
100%, you got the initial funds to come back but the return is still there. For me it’s 100% worth while
Hi Jamie,
A perplexing question for me is- Are you not being doubled taxed if you use limited company- 1) first on net profit on company earnings as form of corporation tax 2) On the dividends you take out if your personal earnings cross 40k/ year?! .
Best Regards
I've got the same issue.
I was told that it only really works best if you don't need the profits personally. You can keep them in the company and use them to reinvest over time and therefore only be subject to corp tax.
If you have debt though (which is likely else why would you incorporate) then the higher mortgage rates wipe out most of the benefits anyway.
One thing I like is it's easy to give away a small proportion of the shares to kids etc on a regular basis.
Where can I find a decent tax advisor who is familiar with these methods?
Good question, get recommendations from experts!
Hi Jamie,
I have just bought the property (buy to let) under limited company for fix rate for 5 years. My circumstances change can I move in that property.
Any advice please?
Thanks
You can't move into your own rental property
@@JamieYork I assume this is a mortgage lender restriction as opposed to LTD company rules?
Isnt it a paper exercise,? You borrow £90,000 to buy/transfer your £120,000 property to your Ltd Co, that money goes to you, so your Co pays off the mortgage with the money you've paid yourself and you only incure the fees youve spoken about?
Went through incorporation with a client to find out he’s worse off as the interest for a ltd co is so much higher than an individual. Do your homework before doing this. Also going LLP to ltd you need to demonstrate the badges of trade to claim incorporation relief.
So spot on Rob. Thanks for sharing your experience. You can’t just look at the tax. There’s so much more to be looking at!
First :)
Damn that was fast!
You dont need a reason for setting up a LTD company, your reason is you want to pay less tax. There is nothing wrong with tax avoidance, it is completley legal. Tax evasion is different and illegal. I habe also read about LLP with the 2 year thing, cant see any issues with that.
How about a hybrid structure LLP with Ltd Co as designated member and you as member of LLP - you own100% of shares in the LTd Co - ask me about it and we`ll get you the cool cars
All of these ideas are of no use if we do not have a cost effective implementation and accounting service available in the market ! Property 118 charges like 30k+ ?!! seriously !
And what is the exit cost from this structure ! this is not mentioned anywhere i.e. liquidation at the end
What if you have a cashed property no mortgage. Anyone know the costs if wanting to put it into a ltd company?
I am in same situation and would like to know if i need to pay capital gains if it is my main residence?
This all sounds very costly and complicated. The easiest and most certain way of minimising tax legitimately is to pay any personally owned BTL profits is into a SIPP. You get 25% top up for every pound and it increases your tax code. You incur too many costs transferring to a Ltd. The best thing is to buy via a LTD in the first place. Accept you’ve bought prop A personally and invest in a SIPP. Buy all future BTLs via a LTD. But remember it is very difficult to extract profit from a LTD company these days.
👀
Suggestion based on 30 years experience. Before you make any move in business seek professional help, do not rely on guidelines from amateur CZcams presenters. Jamie York covers his butt by saying he is not a tax adviser etc., heed that comment, it’s a get out of jail card.
Agreed! ALWAYS get proper tax advice. As Andy has said, whilst this is from practical experience and directly from qualified accountants, I am NOT qualified to give financial advice :)
Property118?
They’re great!
Their structures to implement are EXPENSIVE. £31k
@@dwjudd exactly! There is a vacuum in the market for a good tax consultant / accountant
Llc’s are better than LTDs dunno why your talking about LTDs??
That's not 100% accurate
@@JamieYork could you explain why? Think that could be a great video topic
I’ll purchase it in the company to keep my girlfriends grubby has off it
😂😂