Inheritance, Property LTD Co. No or yes?

MrAA

Hi,
Some advice would be greatly appreciated.

My family & I are discussing estate planning between my Sibling & I.
We have a fair piece of property that could be split up into two independent premises There is a HOUSE & a commercial premise. There is potential to modernize & we potentially have some capacity to put that modernization in Train.

THE question, is there a real need to complicate things too much?
Under the parameters of inheritance, the limit for a child is €335,000 times two children (€670,000) This would suggest that we would be relatively safe from CGT on sale

From what I understand the HOUSE could be modernized incorporate 2 flats a flat each make the flats our main residence then subsequently leases 1 room out each & avail of rent a room relief.

Then the commercial building an idea could be to lease the premise trough a newly formed company by my sibling & I, then sublet the premises to a third party.

THE main thing I believe to avoid is the incorporation of the buildings into a LTD Co. YES?

Or lease the commercial building to a third party, the rent would be split & the tax rate would be calculated given our salaries, YES?

ANY tips, I thank you for viewing.

whomitconcerns

MrAA wrote: »

Hi,
Some advice would be greatly appreciated.

My family & I are discussing estate planning between my Sibling & I.
We have a fair piece of property that could be split up into two independent premises There is a HOUSE & a commercial premise. There is potential to modernize & we potentially have some capacity to put that modernization in Train.

THE question, is there a real need to complicate things too much?
Under the parameters of inheritance, the limit for a child is €335,000 times two children (€670,000) This would suggest that we would be relatively safe from CGT on sale

From what I understand the HOUSE could be modernized incorporate 2 flats a flat each make the flats our main residence then subsequently leases 1 room out each & avail of rent a room relief.

Then the commercial building an idea could be to lease the premise trough a newly formed company by my sibling & I, then sublet the premises to a third party.

THE main thing I believe to avoid is the incorporation of the buildings into a LTD Co. YES?

Or lease the commercial building to a third party, the rent would be split & the tax rate would be calculated given our salaries, YES?

ANY tips, I thank you for viewing.

You need a solicitor and/or tax consultants advice

MrAA

Often do, no harm in some discussion.It is fair to believe that someone might have some experience with such a matter
Have you any other views

antoinolachtnai

MrAA wrote: »

Often do, no harm in some discussion.It is fair to believe that someone might have some experience with such a matter
Have you any other views

It is very wise of you all to take the time to plan now for the best long term outcome.

Unfortunately your description is very confused. It is not clear who owns this property or what your family hopes to really achieve.

I would advise you to deal with the non-tax issues first. In general it really does not make sense for ownership of a relatively small property like this to be split. I would strongly suggest that one of you find a way to buy the other out.

However, if you really enjoy each other’s company and want to spend time together over the long term, then maybe it makes sense.

You really do need professional advice on this.

MrAA

Thank you for your observation currently my parents own A Large property 1000 sqm that has future potential to be split into two individual properties.
Part 1 residential Part 2 commercial the property is conveniently designed in such a fashion.

Near term equip the property to its fullest potential Turn over some rental income with potential to either disburse or leverage forward in the future. We potentially have some capacity to put the modernization in Train.
I note your point regarding future relationships & we as siblings could agree to a potential scenario Like a shareholders agreement.

How else can I describe to help?
Again Thank you for commenting

Graham

What benefit are you hoping to gain by holding/leasing (it's not clear which) the property through a company?

antoinolachtnai

If the property is 1000 sq m then surely the value must be in the millions? This will result in a big capital acquisitions tax bill. Have you gotten a valuation?

I don’t mean to pry but it may be that the building is worth more as a site than it is as a building. It may not make sense to renovate it.

The type of renovation you are talking about will cost quite a lot of money. It is likely to be a pretty involved project.

Also I would be concerned that you could damage the value of both residential and commercial parts by mincing together. You might be better to do one or other (but obviously we don’t know the site).

There are tax considerations sure, but I think your idea to convert it into mixed commercial residential may be the wrong one. And it may not save you any tax anyway.

You may well be better selling up to a developer, paying hhe tax, pocketing the cash and investing the rest in a few apartments for you both to live in. Don’t discount the straightforward options.

wowy

MrAA wrote: »

I note your point regarding future relationships & we as siblings could agree to a potential scenario Like a shareholders agreement.

Whatever about the relationship between you and your sibling, if either of you dropped dead in the morning you'd potentially be binding your successors to a very illiquid and demanding commitment.

MrAA

No I think were I was going wrong was AS if I were setting out to purchase properties a LTD Co. maybe a vehicle to accumulate Rent & pay the rent back out trough the means of a salary.

Also if the properties were incorporated there could be serious implications when trying to sell the properties in the future.

So NOW I don't believe a LTD co. is necessary - YES?

Graham

MrAA wrote: »

I don't believe a LTD co. is necessary - YES?

I can't think of many circumstances where it would be necessary/beneficial.

MrAA

I totally agree not to discount the straight forward options.
To answer some of your questions
With respect the reason for the severance of the property is to monetize the building to the best of its ability. It would not be in a area that could fetch Millions nonetheless its is a fair piece.

Regarding the modernization 100sqm requires work/refurbish then the remaining can be spilt then a lick of paint. I have not had a survey done on the 100sqm yet still I witnessed the work done on the previous neighbors same 100sqm building however they are no longer around to seek advice but I have detailed evidence of WHAT is required.

It is important to note the end product would not end in a MIXED use commercial/residential thankfully the property can be conveniently be severed down the middle. THE property backs onto 2 streets one to the front one to the rear with each side having its own independent access from the street DUAL access

I have had a valuation & opinion from a long established auctioneer & there opinion was to split to achieve the best results.

The properties would NOT interfere with one another.

Maybe renovate together as a family - YES?

MrAA

Hi, again we can incorporate on the event of the death the remaining sibling would be offered the first refusal to purchase for the market rate. There could business insurance taken out to that effect to help the remaining sibling to buy out the remaining party.

Along those lines something mature at the outset.

MrAA

There is a lot of TALK circulating this topic do you have much experience regarding LTD for Property?

brisan

MrAA wrote: »

Hi,
Some advice would be greatly appreciated.

My family & I are discussing estate planning between my Sibling & I.
We have a fair piece of property that could be split up into two independent premises There is a HOUSE & a commercial premise. There is potential to modernize & we potentially have some capacity to put that modernization in Train.

THE question, is there a real need to complicate things too much?
Under the parameters of inheritance, the limit for a child is €335,000 times two children (€670,000) This would suggest that we would be relatively safe from CGT on sale

From what I understand the HOUSE could be modernized incorporate 2 flats a flat each make the flats our main residence then subsequently leases 1 room out each & avail of rent a room relief.

Then the commercial building an idea could be to lease the premise trough a newly formed company by my sibling & I, then sublet the premises to a third party.

THE main thing I believe to avoid is the incorporation of the buildings into a LTD Co. YES?

Or lease the commercial building to a third party, the rent would be split & the tax rate would be calculated given our salaries, YES?

ANY tips, I thank you for viewing.

When you say make the flat your main residence would you both be living in the flats or just declaring them as your main residence