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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5115
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My brothers and I have inherited a residential property from

Customer Question

My brothers and I have inherited a residential property from our parents. The property is still part of the estate, having not yet been transferred. We have set up a ltd company with the intention of transferring the property to this company as the seed of a buy-to-let portfolio. The property is currently unencumbered with no borrowing against it.
I'm wondering if there is a way to account for the transfer of the property as a loan in order that future distributions from the company can be treated as loan repayments and not income? The property value is approx £175k which gives an idea of how much SDLT would be incurred if we first needed to transfer the property into our names to achieve the above treatment.
Submitted: 1 year ago.
Category: Tax
Expert: replied 1 year ago.

Thank you for your question.

May I ask why you would not consider registering the property into the LTD company in the first place thus avoiding two sets of SDLT.

You can treat the consideration as a loan to the company available for repayment as and when the company cash flow/finances makes it possible.

Being a second home/investment property, SDLT payable would be

0-125k @3% £3,750

£125k-£175k @5% £2,500

Total £6,250

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Customer: replied 1 year ago.
Hi,Thanks for the response. The intention is indeed to transfer the property directly to the company, but I didn't want to rule out the option of transferring it into our names first if that was the only way to achieve the loan treatment.So just to confirm your advice, we can transfer the property directly from the estate to the company, and treat the consideration as a loan? I assume there is no straightforward way to avoid SDLT on the transfer to the company, but can this be treated as a business expense?
Expert: replied 1 year ago.

Thank you for your reply..

Stamp duty is a capital cost and will be added to the cost of property for accounting and tax purposes. It will not be treated as a business expense to be written off in the year of spend.

Consideration can be treated as loan and paid off as and when.

More information on sdlt on transfer of property to LTD company can be found here

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Expert: replied 1 year ago.

Hi there, just checking if you have any points from my answer that need further clarification.

Many thanks