Move Buy-to-Let properties to Limited Company before 30th March 2016!
Opportunity to move personal Buy to Let properties to Limited Co, avoid 3% stamp duty increase and keep mortgage interest relief will close after Christmas!
Since the Chancellor fired his second salvo against the private "amateur" landlords in the BTL market our phone has not stopped ringing!
Many landlords had already decided to move to a Limited Company structure due to the tapering of the ability to apply mortgage interest relief on rental income in a personal capacity (especially for higher rate tax payers). Now with the new stamp duty rates he announced in the Autumn Statement (to take effect on April 1st. 2016), the pressure is now on to complete the move before 30th March 2016, or incurr an extra 3% charge on the stamp duty rates already in place.
Landlords who see a long term future in this investment class for themselves are changing to a Limited Company structure. As it typically takes around 2 months to get a mortgage offer out of the eight lenders who have a Limited Company BTL product, investors realise that there is only around 4 weeks to get the process started.
To change to this structure you actually have to effectively sell personally held property at market values, paying such CGT (Capital Gains Tax) as is necessary and buy it into the company structure, paying Stamp Duty on the purchase as normal.
The caveat to this is that if you already operate a considerable property business in your own name you may be able to restructure it without creating a "taxable event", but you should urgently seek your accountant's opinion, as this could provide considerable relief from CGT.
In the short term the legal costs and rebrokering costs of the loans involved may wipe out the advantages of doing it. But many seem to be calculating that there may be more pain on the way for private investors and they are rushing to get their portfolios restructured before the April 1st Stamp Duty rate commences.
It should be noted that at present there will be a disparity in April between Scotland and the rest of the UK, where Scotland has abolished SDLT in favour of a Land & Buildings Transaction Tax, for which no separate surcharge has so far been announced.
These changes, which also effect second homes, will add considerable complication to the legal work to be done in the property transaction, which will slow matters down when the need for speed will be at it's greatest.
Remortgagers should be sure to leave a month before the deadline for the legal work, which means getting mortgage offers sorted out by the end of February. There is no time to lose!
B2B has lenders ready to process your applicaion. Submit an application now to get the process started!