How to Transfer an Existing Property to a Limited Company

How to Transfer an Existing Property to a Limited Company Without a Headache

Many landlords start out with their first buy-to-let in their personal name. Over time, rising tax bills and a growing portfolio can make transferring those properties into a **limited company** an attractive option.

The move can bring tax advantages, more flexibility, and easier portfolio management - but it must be done correctly to avoid large, unexpected costs.

Here’s how to make the process as smooth as possible.

Step 1: Understand What Incorporation Really Means

When you move a property from your personal name to a limited company, HMRC treats it as a **full market value sale**.

Your company is, in effect, buying the property from you.

You will need:

- A solicitor experienced in property incorporation

- A professional valuation of the property

- A company set up for property investment, often as a Special Purpose Vehicle (SPV)

Step 2: Calculate the Tax Position First

Two main taxes can apply when transferring to a company:

- Capital Gains Tax (CGT) on any increase in value since purchase

- Stamp Duty Land Tax (SDLT) on the company’s purchase price

In some cases, Incorporation Relief can defer CGT, but this only applies if your property activity is considered a genuine business.

Step 3: Arrange Your Mortgage Early

If there is a mortgage on the property, you cannot transfer it directly to the company. You will need a new limited company buy-to-let mortgage.

Rates and lending criteria may be different from personal buy-to-let mortgages, so speak to a broker early.

Step 4: Set Up the Limited Company

Most landlords use an SPV for property ownership. You will need to:

- Register the company with Companies House

- Choose the correct SIC code for property letting and investment

- Appoint directors and shareholders

- Open a dedicated business bank account for rental income and expenses

Step 5: Keep Your Records in Order

Document everything: valuations, contracts, mortgage agreements, and tax calculations. This will keep your accountant happy and protect you if HMRC ever reviews the transaction.

Pros and Cons of Incorporation

Potential Advantages

- Full mortgage interest deduction

- Lower corporation tax rates compared to higher personal tax bands

- Potential inheritance tax benefits

- Easier reinvestment of profits without paying personal income tax immediately

Potential Disadvantages

- Upfront CGT and SDLT costs on the transfer

- Higher mortgage rates for company borrowing

- Legal and accounting costs

- Ongoing administration responsibilities

For the right investor, moving property into a limited company can create long-term tax efficiency and growth potential. For others, the costs may outweigh the benefits. The key is to plan carefully and seek expert advice.

Talk to an Expert at Sourced to see if incorporation is the right move for you and how to make it as cost-effective as possible.