Tax Question

remembering

If 2 people bought a property and one person is the beneficial owner and the other person is the legal owner. Is it the beneficial owner that pays the tax on the property each year?

Another question: Does the beneficial owner take all the profit from the property?

Thanks

Stanford

How are you differentiating between the legal and beneficial owner?

remembering

Not sure what you mean.. Thanks

Stanford

Two people buy a property so they are both legal owners of the property, what is different with the "beneficial" owner?

remembering

Sorry I know that but my case is just slightly different. I should have explained that in my first question

Would you know the answer to my questions. Thanking you

Stanford

I can't give you an opinion as I don't understand what difference there is between the beneficial owner and both legal owners

Peregrinus

1. Whose name is on the title? If more than one name is on the title, say so.

2. Who paid for the purchase of the property? If more than one person paid for the purchase of the property, say so.

3. What was the reason for adopting this structure for the purchase of the property? Why was it decided to separate legal and beneficial ownership?

Without knowing the answer to these questions, it's not really possible to say what the tax treatment might be.

remembering

Both names on title

Other partner paid for property

He's the beneficial owner. There are reasons for this so will leave that there.

Thanks for replying..

Peregrinus

OK. So A and B are the registered proprietors of blackacre - lets say as joint tenants - but they hold it as nominees for B alone. Let's also say there's no discretionary trust or the like here; this is a bare trust. A and B are both adults, etc, etc, and there are no relevant facts which you have omitted to mention in the hope of getting the answer you want.

Tax: A and B, as registered proprietors, are jointly liable for any taxes, rates, etc levied on blackacre. A is entitled to reimbursement from B, however, and if B doesn't reimburse him then he has recourse to blackacre itself - i.e. in the last analysis he can get a court order for the sale of blackacre, and the payment to him out of the sale proceeds of whatever is owed to him.

But none of this concerns the Revenue Commissioners. They can pursue A, or B, or both, for the full amount of any tax that is owing. A's right to reimbursement does not give him any right to defer paying the tax until he has been put in funds by B.

Rent: If the property is rented (let's say to C, an arm's length tenant) then A and B are jointly entitled to the rent as against C. However, as between themselves, A must account to B for the rent - i..e. he must pay the rent to B, though he can deduct any amount for which he is entitled to reimbursement. (Like the land tax he paid that B won't repay to him.)

It will be evident that, from A's point of view, it's all downside. There are risks (that he will incur costs/expenses/liabilities, and have difficulty reclaiming them from but no compensating rewards or advantages. But he should have thought of that before he agreed to act as a voluntary trustee, the fool.