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Are flats a business?

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  • 06-05-2011 6:27pm
    #1
    summereire
    Registered Users Posts: 299 ✭✭


    Hi, I'm going to get proper advise on this but just wondering if anyone knows of any resources online for this. I've been looking at Revenue's website but not come up with anything.

    For the purposes of CAT, CGT and Stamp Duty is a house split up into flats considered a business or a residential property?


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    #2
    ravendude
    Registered Users Posts: 585 ✭✭✭ravendude


    summereire wrote: »
    Hi, I'm going to get proper advise on this but just wondering if anyone knows of any resources online for this. I've been looking at Revenue's website but not come up with anything.

    For the purposes of CAT, CGT and Stamp Duty is a house split up into flats considered a business or a residential property?

    If the property is not your nominated/primary home yes, CGT etc. would be payable on any gains.


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    #3
    Victor
    Registered Users Posts: 78,393 ✭✭✭✭Victor


    There are three main categories you need to think of:

    (a) your principal private residence - normally where you go home to at the end of the day.
    (b) other residential property, e.g. holiday homes and properties you rent out.
    (c) non-residential properties, e.g. offices or factories.

    There may be some properties that fall into both categories and may need to be looked at in detail, e.g. a residence over a shop or a farm, where the distinction between residential and non-residential is blurred.

    Note that things may vary between what how say the Revenue Commissioners and a council define as a business, residential, etc.


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    #4
    shoegirl
    Registered Users Posts: 2,021 ✭✭✭shoegirl


    They are not a business. The reason I believe so is that most of my leases over the years stipulated I couldnt run a business from the flat I was renting. I presume this is for insurance purposes.

    Also for tax purposes, a flat would be rateable if it were a business so right now, its not.


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    #5
    summereire
    Registered Users Posts: 299 ✭✭summereire


    Thanks everyone for your feedback. I'm thinking specifically if a house that's not lived in and that is rented out in flats, when transferred to a child by an elderly parent, qualifies for business relief and retirement relief from CAT and CGT. I can't find anywhere a definition of what a business is and whether a house that you DON'T reside in but let out as flats is a business. It seems like it as it's purely a commercial venture but I haven't seen this clarified anywhere.


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    #6
    Treehouse72
    Registered Users Posts: 1,003 ✭✭✭Treehouse72


    summereire wrote: »
    Thanks everyone for your feedback. I'm thinking specifically if a house that's not lived in and that is rented out in flats, when transferred to a child by an elderly parent, qualifies for business relief and retirement relief from CAT and CGT. I can't find anywhere a definition of what a business is and whether a house that you DON'T reside in but let out as flats is a business. It seems like it as it's purely a commercial venture but I haven't seen this clarified anywhere.


    No, a house and landlording it is not a "business" in the normal sense.


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    #7
    Ray Palmer
    Registered Users Posts: 8,394 ✭✭✭Ray Palmer


    summereire wrote: »
    Thanks everyone for your feedback. I'm thinking specifically if a house that's not lived in and that is rented out in flats, when transferred to a child by an elderly parent, qualifies for business relief and retirement relief from CAT and CGT. I can't find anywhere a definition of what a business is and whether a house that you DON'T reside in but let out as flats is a business. It seems like it as it's purely a commercial venture but I haven't seen this clarified anywhere.
    I think this is possible if you set-up a company and put the property down as an asset of the company. You would need to talk to an account to sort it all out as you may have to pay CGT on the asset as it transfers into the company. You can make somebody a director of the company but as they are not investing in the company they might be liable for tax as it might be seen as a gift.

    There are lots of varibales in play about what taxs would need to be paid. I have heard of it before as a way to avoid inheritance and CGT. My understanding was it only really benifited people where the person was not well and going to die soon as it would give a lot of control over their assets to those who are given directorship.

    Setting up a company is easily done but you really would need an accountant to explain if there is a benift.


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