Transferring property to a Special Purpose Vehicle (SPV) Company is not a legal option; the properties must be sold to the SPV at the market value. This could incur some or all of the following costs:
- Stamp Duty Land Tax at the higher rate will be payable on the purchase by the limited company, even if it is the first property purchased by the SPV.
- Capital Gains Tax when you sell the property.
- Early Repayment Charges (ERCs) if you are still tied into your existing buy to let mortgage.
- Finance costs incurred by the limited company when take out a new buy to let mortgage.
Usually, the sale of a property to an SPV will not qualify for tax breaks such as Incorporation Relief and Business Asset Disposal Relief because HMRC regards property as an investment rather than a trade or business.
It’s highly recommended you seek the advice of a qualified accountant as everybody’s circumstances are different.
