Own a property personally and want to transfer it to a Limited company? There are plenty of good reasons to do so, including certain tax benefits and limited liability protection. 

Whether you’re transitioning from self-employed, taking ownership of new property, or simply setting up as a landlord for the first time, this guide will help you understand how to transfer property to a Limited company ownership.

Though there’s nothing forcing a landlord to have a Limited company, it can be beneficial– especially in terms of tax savings. There are also legal benefits, such as separating your personal finances from that of the company, which can attract sole traders to the world of limited liability companies. 

For property owners with multiple properties, a Limited company is a typical setup to keep everything tax-efficient, compliant, and separate from your personal assets. So, how do you go about transferring a property to a Limited company? Let’s dig into that question, and also make sure you understand the full implications of the process, in this guide,

And remember, if you’re a sole trader or run a Limited company and need support with your accounts and taxes from a team you can trust, then give us a call today.

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Introduction to property transfers into a Limited company

If you’re reading this guide, then you might already know that moving your property to a Limited company is definitely the right option for you. If you’re still unsure, here are the key reasons why you should transfer property to a Limited company…

Tax efficiency

Depending on the number of properties you own and your income, you might find a Limited company is more tax-efficient due to: 

• Corporation Tax vs. Income Tax: Rental income within a Limited company is taxed at Corporation Tax rates (currently 19-25%), which is generally lower than higher-rate personal Income Tax (40-45% for higher rate and additional tax rate earners).
• Mortgage Interest Relief: Sole trader landlords can’t fully deduct mortgage interest from rental income, whereas Limited companies can still treat interest as a deductible business expense.
• VAT: If your Limited company is VAT-registered, you can claim back VAT on property expenses such as repairs and maintenance.
• Incorporation relief: Defer and save on both Capital Gains Tax (CGT) and Stamp Duty when transferring a property portfolio to a Limited company (more on that later).

Higher potential borrowing power

A Limited company might have access to higher mortgage borrowing since lenders assess affordability based on profits rather than personal income. You may also get better rates on other finance products, such as bridging and development loans. 

Reinvesting profits

As your rental income comes through to your business, you can retain this and reinvest it into new properties or redevelopment projects without incurring the same tax liabilities as if you spent your own personal funds.

Limited Liability Protection

Personal assets are protected since liabilities (e.g., debts, legal claims) remain within the company.

Easier tax planning

Keeping property income separate from your personal finances is not only a good idea legally, it also allows you to better manage your tax liabilities as a Limited company. You can make that even easier by working with Crunch.

Better growth opportunities

A company structure allows shares to be split among investors, making it easier to bring in partners or family members.

Potentially lower Capital Gains Tax (CGT)

When selling a property owned by a company, you may pay Corporation Tax on gains (19-25%), rather than the higher individual CGT rates (18-28%). In some cases, you may even face double taxation when trying to extract the funds of the sale from your company, either in the form of additional income tax or more CGT if you close or sell the business. 

Learn more about Capital Gains Tax in our guide.

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The process of transferring property to a Limited company

Let’s look at the step-by-step process of transferring a property, or even a portfolio, to a Limited company. 

1. Set up Limited company (if you haven’t already)

If you are a sole trader going limited or turning a personal property into an earner, you’ll need to form a new Limited company. You can do this via Companies House, or using our company registration service, which will take you through the process in just minutes.

You’ll need to decide the company name, registered and trading addresses, as well as the names of shareholders and directors. Once registered with Companies House, you should set up a business bank account to keep all finances in one place.

2. Value the property

Even if you recently bought the property, you will need to seek a new valuation, as the transfer of ownership is essentially the process of you selling the property to the business. A RICS-qualified surveyor can provide an official valuation of the property. The valuation will also impact Capital Gains Tax (CGT).

If you need help, Crunch can refer you to a trustworthy team that specialises in valuations and work alongside them to make the entire process as tax-efficient as possible. Speak to our team to learn more. 

3. Secure a new mortgage (if necessary)

If you own the property outright, then you can skip this step. But if you have a personal mortgage on the property, you cannot transfer that to the Limited company, instead, the company will need to take out its own mortgage to cover the property– hence why a recent valuation is essential.

If you are letting the property, then you will need a buy-to-let mortgage, which typically requires a larger deposit than a traditional mortgage. So, with that in mind, it’s worth speaking to an experienced buy-to-let mortgage broker to make you get the product that works best for you.

4. ‘Sell’ the property to the Limited company

Selling the property is the actual transfer of ownership. 

The company must "buy" the property from you (or whoever currently owns it) at market value, and you will need to sign a sale contract (conveyancing process) with your company.

The company will need to pay Stamp Duty Land Tax (SDLT) at market value, rather than the value the property is sold to the company for. This is because the company and individual are classed as connected parties. 

Upon completion, your solicitor will need to register the sale with HM Land Registry. You will receive an updated Title Deed.

5. Pay any tax liability

Capital Gains Tax (CGT)

We mentioned earlier that there are reasonable tax benefits to having your property sit under a Limited company. When transferring multiple properties into a Limited company in exchange for shares, you can delay paying Capital Gains Tax (CGT) – this is known as incorporation relief. 

HMRC states that the property portfolio must operate as a business, and not passively sit in the business just to save tax. 

Speak to your accountant to find out if you qualify for this deferred payment.

If you are just transferring one property, and it has increased in value since purchase, then you will still need to take into account CGT. The rates on residential property gains are:

• Basic rate: 18%
• Higher rate: 28%

Stamp Duty Land Tax (SDLT)

Your Limited company will pay SDLT based on the purchase price. If you’re transferring multiple properties, then Multiple Dwellings Relief (MDR) may reduce SDLT. There will be a 3% SDLT surcharge as the company is considered a second-home owner.

Scottish and Welsh tax variations

If you are in Scotland or Wales, there may be an additional tax consideration: Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales.

Ongoing corporation tax liabilities 

Your property is now part of your company, so you will need to account for corporation tax for the coming years. 

6. Update Tenancy Agreements and any other documents

Any documentation that previously held your name (or the previous owner’s name) will need to be updated, including tenancy agreements, contracts, insurance documentation, deposit protection schemes, and more. You’ll also need to inform your tenants of the change to their landlord, even if it’s still ‘you’ but as a Limited company.

Once you’ve followed all of those steps, your property is now managed through your company. All rental income now belongs to the company, and you (as a director) will pay through salary and dividends, and you can keep money in the business to reinvest in existing or future properties. You can deduct expenses, such as mortgage interest, repairs and management fees, as business costs.

Other types of property transfers

The majority of people who aim to transfer property are self-employed landlords setting up a Limited company, but this is far from the only scenario in which property transfers are beneficial. Here are some other common types to be aware of:

Gift & Purchase

On some occasions, you may wish to transfer ownership of a property to another company – possibly as a result of a purchase of shares in a company. Depending on the current property’s ownership arrangements, you may need to pay capital gains tax. Consult a solicitor to ensure you follow the correct process. 

Partnerships

For some individuals, transferring property into an LLP rather than a Limited business can be more beneficial. An LLP offers favourable tax advantages for family members, but you’ll need to be careful about how you handle the transfer since only the partner who transfers the property into the LLP will add the equity to their balance. 

Family members

If you wish to transfer ownership of property from a company back to personal ownership in the event of your death, you’ll need to work with a solicitor to map out the best way to handle it. Not only do you need to consider inheritance tax, but you might also need to explore other structures, such as LLPs, or even make your family member a director. 

Keep your finances on track

Property ownership, like most other forms of business activity, generates profit and incurs tax liabilities. To be a successful landlord, you need to keep track of your finances and stay in control of your tax obligations. Use Crunch’s Limited company accounting software to scale your portfolio. 

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