Limited company sale of property

andrewtdk Registered Posts: 150 Dedicated contributor 🦉
I was talking to someone with a property rental business run through a limited company and was wondering about the gain on the sale of the asset.

As far as i can see there will be an indexed capital gain for the company which will be payable at the corporation tax rate applicable but then a further tax charge when this money is extracted out of the company at either 10% and 32.5% under dividends or possibly at 10% if he sold the company and made use of the entrepreneurs allowance on the gain on the sale of the shares.

Just wondered if this was right because i cant see why anyone would use a limited company for property rental when you have to pay so much more on the sale of the property



  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    If you have other earnings that push you into the higher rate tax band then your rental profits (and gains) will be taxed at least at 40%. Put them in a company and they are taxed at 21%, until of course you want to get them out.

    If your earnings fluctuate then you can extract as dividends as and when you have spare basic rate band and hence pay no further tax.

    It really depends on the individuals circumstances.
  • andrewtdk
    andrewtdk Registered Posts: 150 Dedicated contributor 🦉
    Thanks for the reply, the tax saving on rental income for higher rate tax payers had totally slipped my mind
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