Use of a holding company to avoid stamp duty

अधिनायक

Say I form a company and buy a house in that company's name. Then I do up the house with a view to resale. Instead of selling the house, I sell the company. Presumably there is no property stamp duty in the second transfer. For large houses being bought with cash, does this not save 9% transaction costs? Am I missing something?

The_Conductor

Beneficial ownership.
Liam Lawlor was done on this one, if my memory serves me right.....
There is now a unit in Dublin Castle dealing solely with stamp duty on property sales (I interviewed for a position in it)- what you are proposing would be like waving a red flag at them.

Nice idea in theory, in practice its tax evasion (not avoidance) and would be treated as such by the Revenue Commissioners.

jhegarty

अधिनाय&#2325 wrote:

Say I form a company and buy a house in that company's name. Then I do up the house with a view to resale. Instead of selling the house, I sell the company. Presumably there is no property stamp duty in the second transfer. For large houses being bought with cash, does this not save 9% transaction costs? Am I missing something?

lets start with CGT, tax on profits the company makes... income tax on your profits from selling it...... i won't go on....

अधिनायक

There would be CGT on the company increase in value whereas no CGT is due on sale of principal residence. I forgot that!

The company would have no profits as it wouldn't trade. I believe would be no income tax on receipts from selling a company, just CGT.

If the company lets you live in the house this might be considered a BIK.

I doubt it's illegal unless you do it with an offshore company and try to evade CGT/BIK. Doesn't look profitable to me.

अधिनायक

It would still work for investment property, no?

calhob_ie

Presuming your a director of the company and live in the house then theres a BIK implication all right. Revenue assume "fair" market rate as indicated by similar examples in the area, failing that they take 8% of the value as the annual benefit.

Cantab.

Best way to avoid stamp duty: get yourself a well-connected accountant. My friend (who works in a well-known bank) bought a 2-bed flat in Dublin a year ago: he has not paid one cent of stamp duty yet. His accountant is dealing with revenue with regards stamp duty. Chances are they will simply 'forget' to go chase him or there will be an incidence of 'collective amnesia' in the revenue commisioners.

Connections are everything. Of course I can't prove any of this - I'm only saying what I've heard.

अधिनायक

I was talking about legal avoidance. My impression is that the revenue are extremely good at collecting this tax where it is due. There are brutal penalties for failing to pay stamp duty on time.