Transfer Property to Limited Company

Transfer Property to Limited Company: What You Need to Know

Many landlords and property investors are now looking to transfer residential or commercial property into a limited company structure. The goal? To benefit from lower corporation tax rates, better inheritance planning, and more flexibility when managing profits. But transferring property is not just a paperwork shuffle—it has tax consequences and legal hurdles that must be understood upfront.

This guide explains how to transfer property to a limited company, the process involved, tax implications like stamp duty and capital gains tax (CGT), and whether there’s any way to do it tax-free.

How to Transfer a Property to a Limited Company

To transfer a property from your personal name to a limited company, you’re essentially selling the property to that company—even if you are the director or sole shareholder. The process includes:

1. Valuing the Property: A professional market valuation is needed for both tax and legal purposes.

2. Conveyancing: Just like a standard sale, a solicitor must handle the legal transfer of ownership.

3. Stamp Duty Land Tax (SDLT) Assessment: HMRC requires SDLT to be paid by the purchasing company unless an exemption applies.

4. Capital Gains Tax Review: If the property has appreciated in value, personal CGT may be triggered.

5. Updating Mortgages: If there’s a mortgage, the lender must approve or offer a commercial mortgage in the company’s name.

6. Reporting to HMRC: Both CGT (for the seller) and SDLT (for the buyer) must be reported and paid.

The process can be completed in a few weeks if straightforward, but complexities like multiple owners, outstanding mortgages, or business-use elements can extend the timeline.

Transfer Property to Limited Company Without Stamp Duty

Stamp Duty Land Tax (SDLT) is one of the major barriers to moving property into a limited company. In most cases, SDLT is payable on the transfer—based on the market value of the property at the time, even if no money changes hands. It’s also subject to the 3% additional property surcharge.

However, there are limited scenarios where SDLT may not apply, such as:

• Transferring property held in a partnership under specific conditions

• Gifted property with no outstanding mortgage (though HMRC may still deem it a chargeable transfer)

• Transferring between connected parties in very specific structures (usually involving trusts or restructuring under tax legislation)

In most residential transfers from personal ownership to a company, SDLT will apply. Commercial tax advice is essential to explore whether any reliefs apply to your specific case.

Gifting Property to a Limited Company

Gifting property to your own limited company may sound like a way to sidestep tax, but HMRC sees it differently. If you gift a property to a company—even one you control—you must still use the full market value to calculate:

• Capital Gains Tax (CGT) on the gain made (you, as the individual, pay this)

• Stamp Duty Land Tax (SDLT) paid by the company on the property’s market value

Unless the property is a business asset and specific holdover relief applies (such as under incorporation rules for landlords with multiple properties managed as a business), gifting will not eliminate tax. Again, it’s classed as a sale at market value for tax purposes.

What Are the Tax Benefits of Transferring a Property to a Limited Company?

While the initial transfer can trigger tax liabilities, long-term benefits often outweigh the upfront cost for serious landlords or investors:

• Corporation Tax on rental profits (currently 25%) is often lower than higher rate personal Income Tax (up to 45%)

• Mortgage interest is fully deductible as a business expense in a company (not so for individuals, due to Section 24 restrictions)

• Retained earnings can be used for reinvestment—there’s no need to draw all profits

• Inheritance planning becomes more flexible with share transfers and trust structures

For growing portfolios or those looking to retain rental profits in the business, these tax efficiencies can make the transfer worthwhile despite the upfront costs.

Other Benefits of Transferring a Property to a Limited Company

Besides tax, a corporate structure gives you:

• Limited liability: Protects your personal assets from business-related claims or debts

• Easier succession planning: Company shares can be passed on or sold more flexibly

• Professional appearance: Useful for attracting funding, business partners, or growing a rental brand

• Streamlined admin: All rental income, costs, and profits run through the company, simplifying personal tax returns

It also allows for pension contributions, investment planning, and business expense deductions in a way that’s more restricted in personal ownership.

Drawbacks of Transferring Property to a Limited Company

Despite the upsides, there are real risks and costs involved:

• Stamp Duty Land Tax (SDLT): Usually due on the full market value, plus the 3% additional rate

• Capital Gains Tax (CGT): Payable by the seller on the difference between original cost and current value

• Mortgage refinancing: You’ll likely need a commercial mortgage, which can mean higher rates and fees

• Loss of personal CGT allowance: When selling property from the company in future, no personal tax allowances apply

• Higher compliance burden: Annual accounts, Corporation Tax filings, and potentially VAT returns must be submitted

So while long-term savings are possible, you need to be in it for the long game.

Is CGT Payable on Transfer of Property to a Limited Company?

Yes, in most cases Capital Gains Tax is payable by the individual transferring the property. Even if no money changes hands, HMRC treats the transfer as if the company paid full market value.

However, Incorporation Relief under Section 162 TCGA 1992 may be available if:

• The property is part of a genuine property business, not just a side rental

• You transfer all assets of that business to the company

• The business includes significant activity like management, advertising, maintenance, and tenant handling

If these conditions are met, CGT may be deferred (not eliminated), meaning the gain is held over into the shares you receive in the company. The CGT will then be due when you dispose of those shares.

Final Say

Transferring property to a limited company can offer tax and operational benefits, but it’s rarely tax-free and always comes with administrative costs. Stamp duty and capital gains tax are the main roadblocks, but for landlords running a professional portfolio, the long-term benefits may be worth it.