Sarah owned five houses bought between 2005 and 2012. After reading that "everyone's moving to limited companies", she set one up and arranged to transfer the houses into it.
What happened
The houses had more than doubled in value. Because the transfer was treated as a sale at market value, Sarah faced capital gains tax on the growth, and her company had to pay stamp duty at the higher rates on the full value.
She had assumed a relief would cover it. But whether it applied depended on how her letting was run, and nobody had checked before the transfer went ahead.
The fallout
- A six-figure tax bill she hadn't budgeted for.
- New company mortgages at higher rates, plus early repayment charges on the old ones.
- Years before the tax savings would pay back the cost.
What could have been different
For some landlords a company is the right answer. For others it isn't, or only for new purchases. Sarah needed advice on her own figures before she moved, not after.
Thinking about a company? See what it could cost and speak to a specialist first.
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Tell us a little about your situation and we'll call you, usually within one working day, to understand what you need. If it would help, we'll then put you in touch with a landlord tax specialist. We'll always tell you who they are before passing on your details. We don't give advice ourselves, and there's no obligation.