1. Separate the reason from the marketed solution
Clarify whether the aim is reinvestment, borrowing, succession, administration or current income. If most profits must be withdrawn for living costs, a corporate retention model may have less value. If future acquisitions drive the plan, transferring existing property may be unnecessary.
2. Compare annual cash after every layer
Model rent, operating costs, interest, tax, loan repayment and extraction. A company may receive a corporation-tax deduction for qualifying interest and retain post-tax profits, but owners can face further tax when value is extracted.
Use realistic mortgage pricing and fees for the company, not the existing personal borrowing rate.
3. Treat the transfer as a CGT disposal
A connected company generally acquires property at market value for capital-gains purposes. Incorporation relief may defer gains where a business is transferred as a going concern with all relevant assets in exchange wholly or partly for shares.
Property letting ranges from passive investment to an organised business. There is no guaranteed hours threshold. Record the nature, continuity and extent of owner activity and the role of agents.
4. Analyse SDLT independently
CGT incorporation relief does not create SDLT relief. Connected-company and debt rules can charge SDLT on value even where little cash changes hands.
The partnership code may produce a different calculation only where a genuine partnership exists and the detailed statutory conditions are met. Joint ownership, a tax return label or a newly written agreement cannot by themselves create the necessary history.
5. Confirm refinancing before final advice
Identify each mortgage, security, early repayment charge and lender condition. Obtain indicative company terms and check whether personal guarantees remain.
The tax sequence must match the legal and banking completion. A plan that assumes debt transfers without lender agreement is not implementable.
6. Reconcile shares, debt and director’s loan
The company’s consideration may comprise shares and other amounts, including assumed liabilities or a genuine loan balance. That split affects relief and future access to cash.
Legal documents, valuation, tax calculation and accounting entries must describe the same transaction. Do not begin with a desired director’s loan and work backwards.
7. Model life inside and outside the company
Include annual accounts, corporation tax, extraction, property sales, refinancing, death, gifts and a possible sale or winding up. Shares rather than properties become the owners’ personal asset, which changes succession and exit mechanics.