selling a property to a company

ManxJules
ManxJules Registered Posts: 2 New contributor 🐸
in General accounting discussion
Hi,

I hope someone can help me? A client has sold a property which he had a mortgage in his personal name to a Ltd company for the nominal value of the property.

He had wanted to have the mortgage and the property in the name of the company but hadn't set the company up at the time. So he has incurred the legal costs, interest costs for some of the mortgage repayments etc and as he has 'sold' the property into the company for nominal value he has lost out on these expenses.

He has requested if he can expense these items through the company and recover some of his costs? However, is this possible? As he has sold the property at nominal value has he in effect made a loss? Or is there a possibility of putting in an 'expense claim form' for these costs and posting against his director's loan???

Sorry if this seems a bit thick? But any help that anyone could give would be much appreciated.

cheers
Jules
:thumbup1:

Comments

  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    When you say it was sold at nominal value, do you mean at current market value. If not you could have related party issues with HMRC valuation office.

    The mortgage interest incurred can only be reclaimed by the company if the mortgage was in the company name, same with the legal costs.

    Hope this goes someway to helping.
  • K H
    K H Registered Posts: 81 Regular contributor ⭐
    Selling to a Co

    Dear ManxJules
  • K H
    K H Registered Posts: 81 Regular contributor ⭐
    Selling to a Co

    Dear ManxJules

    i can see no end of problems here.

    1. Why sell it to a company? there is a risk of double taxation when the property is sold (cgt in the company and income tax on the individual)

    2.how did his lawyer manage to transfer the property to a company without getting the ok from the mortgage company?

    3. even if this transfer did go through the legal costs would be capitalised anyway.

    if you can post some more information i will try to help more.

    best wishes


    K H
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Was Stamp duty paid on the property transfer? Proper conveyancing done?
  • ManxJules
    ManxJules Registered Posts: 2 New contributor 🐸
    Hi,

    Thanks for your help. I should have mentioned that it is an Isle of Man Company and the director is an IOM resident and so there would be no CGT etc as an IOM company is outside of the remit of UK taxes (unless the property was receiving rent of course - which it isn't).

    thanks

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