7 flats on one title to 7 flats on 7 titles/leases - CGT issues??

Here's a starting place:

The IR search engine is working quite well. Paste "CG12730" into it and you are taken there, try a selection of words and if the search fails useful alternative searches are given. Probably quickest to wait till Monday!

Without wishing to alarm you further, perhaps you could search in the Stamp Duty anti-avoidance sections :(

If this was treated as a disposal and repurchase for CGT purposes, the sale would be matched with any purchase in the following 30 days, and as presumably you are buying for the same price that you sold it for, you wouldn't actually make any taxable gain. Next time you sell, it would be matched to the original purchase price in 2001.

Thanks for that - there is obviously a part disposal of each flat.

However, there seem to be several examples related to tax avoidance which preclude the generating of a loss by a disposal/transfer, which I would hope will work in my favour. E.g. bed and breakfasting, No Loss/No Gain, no change in beneficial ownership etc.

Fingers crossed!

Looks like I could be screwed.

I hope so. There is no "price" involved, but "moneys' worth" would be the same for the simultaneous disposal and re-acquisition, and I would remain the beneficial owner, with no risk of market fluctuation. Is there a reference for this in relation to property?

This was the original idea.

Thanks for the thoughts.

I don't see how this could even be considered a disposal and re-acquisition without there being a different interim owner. You can't dispose of something to yourself. All you're doing is breaking up a whole into parts for purely administrative reasons.

Suppose for the sake of argument that you wanted to sell all the flats to their respective tenants. Then you would have to break up the whole into parts, just as you're planning to do now, *and then* sell each part. It is the last stage, the sale, which would carry with it the CGT and SDLT liabilities, not the first break-up stage.

If there is no disposal, there can be no realisation of gain. If there is no transfer for consideration, there can be no SDLT liability.

Ronald et al,

Having investigated this a bit further:

The granting of a lease generates a disposal.

I cannot grant a lease to myself as it would be void - This is a Land Registry response based upon a House of Lords case, Rye v Rye 1962.

It therefore seems that I have to transfer the freehold to a management company, and I may, or may not, be able to grant the leases to myself.

I am seeing a Property Tax Consultant tomorrow, so we'll see what he says, but it seems that all the cards are stacked against me, even though what I want to do is quite innocuous.

Regds

Richard

Why do the 7 titles need to be leaseholds?

Freehold flats generate their own complications, and most lenders wont lend against them - I dont know the finer details, just the generality.

Enough said. If only Faulkner Towers were in Scotland.

Still, it might be worth seeking out, and sounding out, those lenders who will. But they might charge a premium rate similar to your existing commercial one, rendering the exercise pointless.

I know that some BTL lenders have special portfolio packages. Might they not consider lending against an undivided title?

Failing that, if this block is not your whole portfolio, and if the rest of it is less problematic title-wise, is there any mileage in transferring some equity from the cheap loans to the expensive ones, minimising your total interest bill that way?

Here's another crazy idea: You say you'd have to transfer the freehold to an "other" party (such as a company of which you're the sole share holer) and then have this party grant you 7 leases. Transferring the whole unfettered freehold and then re-granting yourself leases would involve two (well, eight) disposals and necessarily crystallise a gain, and also presumably involve SDLT on the way out and on the way back.

But granting a lease is a disposal of rights (usually the right to occupy and the right to sell that right on). Instead of transferring those occupancy rights out and in again as part of the freehold, could you not simply reserve them? You have them already, and could perhaps simply transfer the bare freehold (which itself is not very valuable).

We're looking into this as we speak.

More or less maxed up on the less problematic ones.

I'll try to understand this, (), if we dont have any success with a portfolio lender.

Thanks for the thoughts!

Its not the current lenders that are the problem but the continued availability of such lenders to future purchasers. This lack of mortgage ability reduces their value.

In message , john boyle writes

Not necessarily in my case. Creating leases in my name for each of the flats creates a CGT liability, even though I would have no proceeds with which to pay the tax - seems crazy, but that's how it looks.

However, when I eventually decide to sell, I can create the leases and grant them to the buyers at the time. This way, the CGT liability wont arise until I have the money, but the flats will be mortgageable in the ordinary market, so value wont be affected.

I think that makes sense??

In message , Richard Faulkner writes

ie: You're stuck with the situation[1] but as and when you decide to sell them off individually you can grant leases at that point.

[1] Unless you really wanted to find some money to pay some CGT now rather than later.

What about these new pension jobbies, is CGT payable if you transfer a property you own into one?

In message , Richard Faulkner writes

Yes it does!

In message , " snipped-for-privacy@privacy.net" writes

There is no way that I will either want to, or be able to, find the money to pay now, (or in a couple of years when it is due). The aim of the exercise is to save around £3,000 p.a.. Paying the CGT which would be due would negate most of this saving.

I'm not sure, but I have already decided that I dont trust pensions, and I dont want to be forced to sell and buy an annuity with the proceeds of sale

Thanks for the thoughts

I have come late to this thread, so apologies if this has already been discussed.

IIRC, a possible method of bypassing Rye v. Rye (unable to grant a lease to yourself) is to grant 7 leases to 7 different (?) Nominees of your self.

If one could value the freehold reversion down to below the CGT Exemption limit, it could then be transferred into Newco Management Ltd?

Then one buyer comes forward for one of the flats, the lease can be assigned to Newco as part of the sale transaction? Followed by buyer 2 etc etc.

Just some caffeine induced thoughts. :)

I have come late to this thread, so apologies if this has already been discussed.

IIRC, a possible method of bypassing Rye v. Rye (unable to grant a lease to yourself) is to grant 7 leases to 7 different (?) Nominees of your self.

If one could value the freehold reversion down to below the CGT Exemption limit, it could then be transferred into Newco Management Ltd?

Then one buyer comes forward for one of the flats, the lease can be assigned to Newco as part of the sale transaction? Followed by buyer 2 etc etc.

Just some caffeine induced thoughts. :)

I have come late to this thread, so apologies if this has already been discussed.

IIRC, a possible method of bypassing Rye v. Rye (unable to grant a lease to yourself) is to grant 7 leases to 7 different (?) Nominees of your self.

If one could value the freehold reversion down to below the CGT Exemption limit, it could then be transferred into Newco Management Ltd?

Then one buyer comes forward for one of the flats, the lease can be assigned to Newco as part of the sale transaction? Followed by buyer 2 etc etc.

Just some caffeine induced thoughts. :)

In message , Doug Ramage writes

MM! I looked at a House of Lords case called Ingram v..... which referred to Rye v Rye, and where a lady was entitled to grant leases to a nominee, (her solicitor), so it probably possible. However, it is all getting a bit complicated when I might be able to achieve what I want without the complications. I'm going to apply the KISS principle for a while, and see how it goes.

Very lucid ones at that - although I think we understood the first time