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Can a company purchase part of personal home for office space?

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  • 22-09-2015 2:33pm
    #1
    CapedCrusader
    Registered Users Posts: 215 ✭✭


    Hi folks,

    1. Say a company is run in the home of a director and shareholder - I believe the company can pay rent in respect of the amount of space (by square meter) that is used wholly and exclusively for the business. Is this correct?

    2. If the person was to buy a new home, can the company purchase part of it in respect of the space used for the business? I understand in this case, the company then becomes liable for capital gains when the house is sold.

    3. Assuming 2 to be true, if the house in question is in another EU state, is it still possible (assuming the company is Irish registered)?

    4. How does one account for all of this and what paperwork is required. I.e. if it were ok in principal - what documents are required. Can the company just furnish part of the purchase price to the buyer/director and account for this by way of an agreement with the director, or does the company need to be a legal party in the sale, and if so, how is this done?


Comments

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    #2
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    Short answer, it will cost more and cause more grief than the minimal savings that MIGHT arise in the short term. just dont do it!!


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    #3
    CapedCrusader
    Registered Users Posts: 215 ✭✭CapedCrusader


    pedronomix wrote: »
    Short answer, it will cost more and cause more grief than the minimal savings that MIGHT arise in the short term. just dont do it!!

    Thanks for the reply - could you please elaborate on the costs?

    I am aware of the capital gains tax implications. If the property were not in Ireland but somewhere with very modest house price appreciation, these costs would not be huge?


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    #4
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    It is most likely that the tax domicile of the property location would apply!!


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    #5
    CapedCrusader
    Registered Users Posts: 215 ✭✭CapedCrusader


    Yeah, sounds like a bit of a headache alright!


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    #6
    pedroeibar1
    Closed Accounts Posts: 5,108 ✭✭✭pedroeibar1


    Plain daft. OP, your post implies a huge "knowledge gap" on corporate governance. You need to look at company law on arms' length transactions and corporate solvency requirements. Tax domicile is the least of your worries!


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    #7
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    while tax is important, corporate governance is for pussies!


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