Property Rental

WhyTheFace

Hi,

4 siblings. One house each to rent. Is it possible to set up as a company so as to pay corporate tax instead of standard rate?

Thanks in advance

BrokenArrows

WhyTheFace wrote: »

Hi,

4 siblings. One house each to rent. Is it possible to set up as a company so as to pay corporate tax instead of standard rate?

Thanks in advance

You can.

But the houses would need to become owned by the company. So the properties would need to be sold to the company afaik. This has implications for the cost of selling the house at a later date.

You would need to seek a lot of advice on doing this.

Geuze

WhyTheFace wrote: »

Hi,

4 siblings. One house each to rent. Is it possible to set up as a company so as to pay corporate tax instead of standard rate?

Thanks in advance

Note that when the shareholders draw a dividend from the company, or sell shares in the company, they will face income tax and/or CGT.

Genius2013

In a nutshell you can - the below should give you an outline but you obviously need to take proper advice also:

1. House needs to be bought by Company from individuals - as this is a related party transaction this needs to be done at fair market value - will trigger a CGT liability if gain has been made on purchase of house (potentially this may be offset if used as consideration for shareholding - SEEK ADVICE)
2. Company earns profits on rent - 25% tax due on "unearned income"
3. Given that this is a close company (controlled by five or fewer participants) that earns only investment income a surcharge of 20% of undistributed income will apply to any profits after 18 months i.e. any profits earned in year to 31 Dec 2019 not distributed to shareholders by 30 June 2021 will be subject to surcharge
4. Any dividends/income paid to shareholder director subject to income tax

chunkylover4

As outlined above, this would be not be tax efficient to put it mildly. With rental properties the reality is that you will generally make a lot less than you hope with tax and the cost of management. I see rent as a bonus for an asset that will hopefully appreciate in value.

Voltex

I used this as a guide;

http://www.crowe.ie/wp-content/uploads/2017/11/IrishRealEstate-Refreshed-2018.pdf