Generic selectors
Exact matches only
Search in title
Search in content
Search Posts
Search in pages
Search Products
Filter by Categories
Company Secretarial
General Business
General Interest
Investing in Property
Personal Growth
Personal Wealth
Trusts and Estate Planning

If you’ve read my blogs on Investing in Property and on Trusts, or if you’ve been to see me for a no charge chat, you’ll know the right structure for your investments. But how do you fix it if you got it wrong in the first place?

I call this unscrambling eggs!

If you own investment property in your own name and want to sell it to your trust you’re in for two taxes – Transfer Duty at up to 13% and CGT at up to 18%. You’ll also pay Conveyancer’s fees. For tax purposes the deal is deemed to have been at market value, so these taxes can be a deal breaker as there’s no actual cash generated by the sale from which to pay them. so usually it’s best to wait until you sell the property. You can then pay the CGT out of the proceeds (which you would expect to do anyway) and then lend the remaining cash to the trust owned company so that it can buy other investment properties. That way you’re paying tax out of cash and there’s no Transfer Duty.

Now if you own a company that owns residential property, you’re in the same fix as above except that you won’t pay a Conveyancer but you will pay the company secretary. Because of the Double CGT Trap, there are extremely compelling reasons to sell the shares to a trust . The solution is the same as above. If, however, the company owns commercial property, then you can sell the shares to the trust without paying Transfer Duty. The company will still pay CGT (at 22.4%) and Securities Transfer Tax (at 1/4%), but that may be feasible, especially if the company only recently bought the property or happens to have a capital loss brought forward.


Need help with your Trust or Buisness?

Contact us today or set up a free meeting with our CEO, Derek Springett. We have been offering expert advice and business services since 1971. You can also visit our online store to see our full list of services.