How Do I Transfer Property from Personal Ownership into a Company

At Towerstone Accountants we provide specialist property accountant services for landlords property investors and individuals dealing with property tax and reporting obligations across the UK. This article has been written to explain How do I transfer property from personal ownership into a company in clear practical terms so you understand how the rules apply in real situations. Our aim is to help you make informed decisions avoid costly mistakes and know when professional advice is worthwhile.

This is one of the most important and most misunderstood questions in UK property tax. I speak to landlords every week who have heard that owning property through a limited company can be more tax efficient, particularly since mortgage interest relief was restricted, and their next assumption is that they can simply “move” their properties into a company.

Unfortunately, it does not work like that.

Transferring property from personal ownership into a limited company is treated as a taxable transaction, not an internal reorganisation, and if it is done without full understanding it can trigger very large tax bills. In this article I will explain exactly how the transfer works, the taxes involved, when it may or may not make sense, and the limited circumstances where reliefs may apply. Everything here reflects current UK tax rules as applied by HM Revenue & Customs and guidance published via GOV.UK, alongside real world experience advising landlords and property investors.

The starting point, there is no simple “transfer”

The first and most important thing to understand is this.

You cannot simply move a property from yourself into a company.

For tax purposes, HMRC treats the transaction as if:

You sell the property to the company

The company buys the property from you

The transaction happens at market value, even if no money changes hands

This is the case whether the company is new or existing, and even if you own 100 percent of the shares.

From HMRC’s perspective, you and the company are separate legal persons.

What taxes are triggered by the transfer

Because the transfer is treated as a sale and purchase, two main taxes are usually triggered.

Capital Gains Tax for you personally

Stamp Duty Land Tax for the company

These taxes arise independently and can both be substantial.

Capital Gains Tax on the individual

When you transfer property into a company, you are treated as selling it at open market value.

Capital Gains Tax is calculated as:

Market value at transfer date

Less original purchase cost

Less allowable costs and improvements

Less any reliefs available

The resulting gain is taxed at the prevailing Capital Gains Tax rates.

Key points to understand:

It does not matter what you paid yourself

It does not matter if no cash changes hands

HMRC uses market value rules for connected parties

CGT is based on gain, not cash received

For landlords who have owned property for many years, the gain can be very large.

Capital Gains Tax rates and allowances

For individuals:

Residential property gains are taxed at higher CGT rates

The annual CGT allowance may apply

The allowance is relatively small compared to property gains

CGT is payable within strict time limits

This is often the biggest immediate barrier to incorporation.

Stamp Duty Land Tax for the company

At the same time, the company is treated as buying the property.

Stamp Duty Land Tax is calculated based on:

The market value of the property

The applicable SDLT rates

The additional property surcharge

In most cases, companies pay:

The higher rate of SDLT

Including the additional 3 percent surcharge

With no main residence relief

This applies even if you already own the property personally.

Why mortgage balances do not reduce SDLT

One very common misunderstanding is assuming SDLT is calculated on the mortgage balance.

This is not the case.

SDLT is charged on the market value of the property, not on:

The outstanding mortgage

The equity transferred

The net value

Even if the company takes over the mortgage, SDLT is still charged on full market value.

The combined tax cost, why this is so expensive

When you combine CGT and SDLT, the upfront tax cost of transferring property into a company can be extremely high.

In many cases, it is:

Tens of thousands of pounds

Sometimes more than the annual tax saving

Often taking many years to recover

This is why blanket advice to “just put it in a company” is so dangerous.

What happens to the mortgage

In addition to tax, the mortgage position must be addressed.

You cannot simply assign a personal mortgage to a company.

In practice, this means:

The personal mortgage is redeemed

The company takes out a new mortgage

Refinancing costs apply

Interest rates are often higher

Personal guarantees are usually required

Mortgage arrangements often make or break the feasibility of incorporation.

Using a director’s loan account

When property is transferred into a company, the company usually owes you money.

This is recorded as a director’s loan account.

For example:

Property transferred at market value

Mortgage taken over by company

The difference is credited to your loan account

This loan can often be repaid to you tax free over time, but it does not remove the initial CGT and SDLT problem.

The Section 162 incorporation relief exception

There is one key relief that can sometimes apply, but it is far narrower than many people believe.

This is Section 162 incorporation relief.

What Section 162 relief does

Section 162 relief can defer Capital Gains Tax when a business is transferred into a company.

If it applies:

CGT is not paid immediately

The gain is rolled into the shares

Tax is deferred until shares are sold

This relief only applies to CGT, not SDLT.

When Section 162 relief may apply

For Section 162 relief to apply, HMRC must accept that:

You are operating a genuine property business

The business is transferred as a going concern

All assets of the business are transferred

Shares are issued as consideration

The activity amounts to more than passive investment

This is where most claims fail.

Why most landlords do not qualify for Section 162

HMRC has been very clear in recent years that:

Simple rental activity is usually not enough

Owning a few buy to let properties is often treated as investment

The level of activity must be significant

Evidence of business operations is required

Examples that may support a claim include:

Multiple properties

Active management

Significant time commitment

Staff or systems

Commercial scale operations

Even then, relief is not guaranteed.

Section 162 does not remove SDLT

This is critical.

Even if Section 162 relief applies:

Capital Gains Tax may be deferred

Stamp Duty Land Tax is still payable in full

For many landlords, SDLT alone makes incorporation uneconomic.

Partnerships and incorporation relief

In some cases, property held in partnership may qualify for different treatment.

There are partnership specific rules that can:

Reduce SDLT in limited circumstances

Apply only where a genuine partnership exists

Require careful historic evidence

These cases are highly technical and often challenged by HMRC.

This is not an area for DIY planning.

Transferring property gradually, is it possible?

Another common question is whether you can transfer properties one by one over time.

From a tax perspective:

Each transfer is a separate taxable event

CGT and SDLT apply each time

Spreading transfers does not remove the tax

It may help cash flow, but not total tax

There is no “phasing” relief built into the rules.

Alternatives to transferring existing properties

Because transferring existing properties is so expensive, many landlords take a different approach.

Common alternatives include:

Keeping existing properties personally

Buying new properties through a company

Running a mixed structure

Focusing on future acquisitions

This often avoids crystallising historic gains.

Using a company for future purchases only

This is often the most sensible route.

In this structure:

Existing properties remain personally owned

New purchases are made through a company

Mortgage interest relief is preserved on new buys

No CGT or SDLT transfer cost arises

While it creates complexity, it often produces better long term results.

Commercial property considerations

Commercial property transfers follow similar principles, but VAT and SDLT reliefs can sometimes change the outcome.

Factors include:

Whether VAT applies

Whether an option to tax exists

Whether the transfer qualifies as a going concern

Commercial cases require bespoke analysis.

Record keeping and valuation

If a transfer is undertaken, robust valuation is essential.

HMRC may challenge:

Undervaluation

Informal estimates

Related party pricing

Professional valuations are often required to defend the position.

Common mistakes I see in practice

These issues come up repeatedly:

Assuming there is no tax because ownership stays the same

Ignoring SDLT entirely

Believing online incorporation calculators

Claiming Section 162 without evidence

Transferring before seeking advice

Triggering tax with no funding plan

Once a transfer completes, the tax consequences are very difficult to reverse.

When transferring property into a company may make sense

Despite the risks, incorporation can make sense where:

The portfolio is large

Mortgage interest is substantial

Long term reinvestment is planned

Profits are retained in the company

The upfront tax cost can be funded

Section 162 relief is realistically available

These cases are the exception, not the rule.

When it usually does not make sense

In most cases, transferring property does not make sense where:

Only one or two properties are owned

Gains are large

Mortgages are modest

Income is needed personally

Cash is tight

The goal is short or medium term holding

In these situations, incorporation often increases total tax rather than reducing it.

Why advice is essential before acting

This is one of the most expensive mistakes landlords can make.

Before transferring property, a proper review should include:

CGT calculations

SDLT projections

Mortgage implications

Cash flow modelling

Section 162 eligibility review

Long term exit planning

Generic advice or social media guidance is not sufficient.

A simple way to frame the decision

A practical way to think about this is:

Companies are usually best for new acquisitions

Existing properties are often best left where they are

Trying to retro fit company ownership after years of growth is usually costly.

Final thoughts on transferring property into a company

Transferring property from personal ownership into a limited company is not a simple administrative step, it is a major tax event. While owning property through a company can be very tax efficient in the right circumstances, getting there by transferring existing properties often triggers tax bills that outweigh the benefits.

For most landlords, the better strategy is forward planning rather than retroactive restructuring. Understanding the true costs, the limited availability of reliefs, and the long term implications is essential before taking action.

If you are considering transferring property into a company, that is the point where professional advice is not just helpful, it is critical. The cost of getting this decision wrong is far higher than the cost of getting it right at the planning stage.

You may also find our guidance on Can I own rental properties through a limited company and Do I pay Capital Gains Tax when selling a rental property useful when exploring related property tax questions. For a broader overview of property tax reporting and planning topics you can visit our property hub which brings all related guidance together.