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05-01-2012, 09:44 AM
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Leasehold extension & Corporation tax
We are buying a property which is leasehold with a share of the freehold.The freehold company owns four flats & the owner of each flat lease owns 25% of the freehold company. The leases are all 87 years at present & are being extended to 999 years,in our case at the same time as we complete. Because the owners of the freehold company & the leasehold flats are the same the lease extension is being done at nil premium. We are having the lease extended as, by the time we come to sell the property, the lease will be below or close to the threshhold required by mortgage lenders to make a loan.
The question is whethey HMRC will determine a corporation tax liability as the company is effectively exchanging an 87 year lease for a 999 year lease & is not charging a premium for this. In this regard one has to assume that weer the current 87 year leases to run to expiry the freehold company would grant new lease to the leaseholders, who are also its owners, also at nil premium. Your help would be much appreciated. 
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06-01-2012, 09:34 AM
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Re: Leasehold extension & Corporation tax
I have not heard of any tax liability here but point probably better answered on a specialist site such as LandlordZONE Forums
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RICHARD WEBSTERwww.rwco.co.uk As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.
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