Injecting properties into a Company

The properties investor, having considered all of the angles, may conclude that the best vehicle for holding his properties, whether for renting as a business or as an investment, is a company.

At that point, he has a whole range of other decisions to take.

a. What is the company to be called?

b. How much share capital should it have?

c. Who will the shareholders be?

d. Which bank to use?

e. Which firm of an accountant to appoint as auditors?

Some serious tax implications:

1. Transfer of properties from an individual to a company is a disposal for purposes of real property gains tax.

2. When transferor and his close family retain control of the transferee company, the market value of the property at that time of transfer is treated as the disposal value, regardless of the figurer put upon it by the parties.

3. Imposition of stamp duty on the transfer of property. The basis for the charge to stamp duty is the amount of the consideration paid or the market value of the property at the time of transfer if that is higher.

Generally, it is better to inject properties into a company at the time of their acquire as that will not attract any real property gains tax. There is no double charge to stamp duty.