Question: Do I sell as a personal asset or through the company?
I bought a property in 1997 for £40,000, and started a small residential lettings company. Some of the properties are registered as owned by the limited company, but this one has always been registered in my personal name, although it was accounted for and managed by the property company as if the asset was the company’s and shows on the company’s balance sheet. Now I want to sell, may I sell it as a personal asset and utilise my annual capital gains tax (CGT) allowance, or must I sell it through the company and pay corporation tax on the profit with no allowance?
Arthur Weller replies:
Answer: You write that this property 'was accounted for and managed by the property company as if the asset was the company's and shows on the company’s balance sheet.' If you mean that the rental income belonged to the company, then it would seem you personally were merely the legal owner/nominee/bare trustee. But the company was the beneficial owner, and consequently it must be sold through the company and corporation tax must be paid on the gain, with no CGT allowance.