We have a small family situation whereby we have a property inside a partnership which needs to be transferred to some form of limited company with different shareholders. Do you have any suggestions on how we can achieve this without being effected by capital gains? We will consider offshore or other structures if this helps as we simply do not have the funds to pay the tax gain.
Arthur Weller Replies:
Unless you are incorporating a business and the property is used commercially in the business (in which case a form of rollover / holdover relief is available) then I do not really have a good answer for you. Rollover / holdover relief is only available for investment property because of a) compulsory purchase, or b) in a case of furnished holiday lettings.
Furthermore, putting the property into a connected limited company will trigger stamp duty land tax based on the present market value of the property, irrespective of what the limited company pays the present owners for the property. Just for comprehensiveness, I should mention that the tax on the capital gain on any asset can be deferred by reinvesting the gain in an EIS company - but this relief is not so practical to apply in most real life cases.