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Company or entrepreneur owning the property

  • 10-07-2017 2:21pm
    #1
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭


    Not sure if this is something more in line with the tax forum, but will try here first.

    What is the thinking behind keeping property outside of the business ownership. That the entrepreneur should own the company building and rent it to the company rather than the company owning it directly.

    I seem to recall it had to do with when the business was sold and possibly double taxation, but I've forgotten the finer points.


Comments

  • #2
    thegolfer
    Registered Users, Registered Users 2 Posts: 346 ✭✭thegolfer


    More or less correct.

    Owning in the company presents issues when you wish to extract the property from the company. Initially there may be cgt on disposal, and then you have to extract the monies which is subject then to income tax in most cases, if a liquidation scenario then cgt for the shareholders.

    From a cash flow point of view sometimes businesses allow the company to hold the property, rather than drawing down funds from the company to purchase the property in your personal name. Loan repayment is within the company where the tax is 12.5% tax on profits, and 87.5% after tax remains, rather than top line 50% in your own name.

    Every situation is different.


  • #3
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    thegolfer wrote: »
    More or less correct.

    Owning in the company presents issues when you wish to extract the property from the company. Initially there may be cgt on disposal, and then you have to extract the monies which is subject then to income tax in most cases, if a liquidation scenario then cgt for the shareholders.

    From a cash flow point of view sometimes businesses allow the company to hold the property, rather than drawing down funds from the company to purchase the property in your personal name. Loan repayment is within the company where the tax is 12.5% tax on profits, and 87.5% after tax remains, rather than top line 50% in your own name.

    Every situation is different.

    Ah, great stuff - that's it.


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