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bigduckontax
bigduckontax, Accountant
Category: Tax
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If you own a residential property in your own name can you

Customer Question

If you own a residential property in your own name can you use a deed and run it through a limited company you have. So your limited company will manage and let your property. Will Capital Gains Tax be due ?
I think you can do this if you are buying a new property but can you use Deed if you already own it? What is the full name for the Deed ?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. Any disposal of landed property attracts Capital Gains Tax (CGT). Most people do not realise this as if it is their sole or main domestic residence they are selling there is an entitlement to Private Residence Relief (PRR) which is given automatically and is at 100% of any gain made. The CGT position thus depends upon the 'sole or main domestic residence' position. If it is not your 'sole etc' then the gain will fall to CGT. CGT is levied on the difference between the acquisition and disposal price. Disposal price is the value as at transfer less transfer costs. The acquisition price is the purchase price plus purchase costs plus any improvements eg installation of double glazing, central heating, extensions etc. The gain is taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. You do have an Annual Exempt Amount of 11.1K o offset this gain. The cheapest way of making such a change is to use a Land Registry Transfer if the property is on the Land Registry. You must be 100% sure of the title before using this method, but it avoids any other conveyancing fees that such a change would normally incur. I do hope my reply has been of some assistance.
Expert:  bigduckontax replied 2 years ago.
I find you rating simply astonishing.
I have told you the CGT position, you have not made any follow up requests, just given me a low rating.
If there is something you do not understand or need more guidance you should follow up, not give me a low rating.
Customer: replied 2 years ago.

HiCustomer

Thank you for your reply and does the Deed have a special name ?

You say CGT is payable but if the residential property is rented out in some cases these can be incorporated with no CGT I understand.

A recent case Ramsay V HMRC 2012 no CGT was payable as it was deemed to be run like a business and Ramsey spent at least 20 hours per week and provided some services such as garden cutting etc.

I would appreciate your thoughts on how active the landlord needs to be?

Full management by the landlord including all maintenance work checking rental payments, protection of deposit, all correspondence with the tenant.

Appreciate your thoughts on what the HMRC will want to see to allow you to incorporate with no CGT payable?

Expert:  bigduckontax replied 2 years ago.
It isn't a deed, it is simply a form which you can get from the Land Registry. Of course, if the property is not registered land than this procedure cannot be undertaken. Also you yourself must be absolutely sure of your title before using a Land Registry transfer.
Ramsey merely allowed roll over relief in respect of the transferred property. This merely postpones CGT until a final sale at an indeterminate future date. However roll over relief is normally only available for a furnished holiday lettings business although the HMRC advice in this area is a trifle woolly. The management activities would appear to be on all fours with Ramsay.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.