My wife and I have a buy-to-let property in Manchester held personally with a mortgage. We also have two other buy-to-let properties in a company. We would like to put the personal property into a partnership or limited liability partnership (to deduct interest payments) with a view to potentially transferring it into the company or selling it in the most tax-efficient manner. I would be interested in your views on this matter. 

Arthur replies: 

There are three main obstacles when incorporating: (a) the capital gains tax (CGT) for the individual; (b) the stamp duty land tax (SDLT) for the company; and (c) the concurrent transfer of any mortgage from the individual to the company. The CGT obstacle can sometimes be overcome through incorporation relief. The SDLT obstacle can sometimes be overcome through partnership relief. The mortgage obstacle could be overcome by terminating current mortgages in the individual's name and restarting mortgages in the company name, but this quite likely could prove expensive. Another factor to consider is whether, after the individual has succeeded in putting the property into the company, they are planning to withdraw all the profits from the company. If this is the case, incorporating is not a good idea because the company will pay corporation tax on the rental profits, and then the individual will pay dividend tax on the extraction of money from the company.