Property Developer/Builder

groundy

I have a client that is building some new build properties on land that they own and intends on renting out the properties once built. They believe there will be a rental income of approx £100k per year once full and therefore my thoughts are to form a limited company.

My question is that Mrs A owns the land at present. Is it possible for XYZ Ltd to pay a builder to build the properties and receive the rent and then pay a ground rent to Mrs A. Or does Mrs A have to pay for the build before transfering the properties into a company?

T.C.

This sounds more like a legal issue than an accounting one! :glare:

groundy

Cheers TC that was my thinking

Dean

I actually got quite excited reading this! Really juicy case but there are quite a few if, buts and maybes that you need to find out more details of what the client is wanting to do in the future. Here's a list of my initial thoughts:
Income tax
Capital gains (Sliding rate Vs ER)
VAT
Corporation tax
Legal titles (formal sale/purchase maybe, company v individual)
IHT
Protection of assets (wills/trusts etc.)
- Ages, family relations and so forth

Regards

Dean

hunterhouse

groundy,

The previous responses are essential considerations.

In principle, either of your suggestions are workable but I believe a minimum requirement - if it is the client's intention to remain the ground-landlord - would be a legally binding lease between her and the Ltd company which would help to keep the scenario clear from the outset. At first sight, transferring the properties into the Ltd company does not seem particularly attractive but the client's personal aspirations and circumstances means the choice is unlikely to be so straight forward.

If you have time, it would be interesting to know the outcome.

Hunterhouse.