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.

dogsears

Hi, you definitely have a situation where some planning would be very worthwhile, but there would be a lot of additional information required and to be honest in my view you would be much better off taking proper professional advice. It seems as though the amounts involved are material and in context the cost involved would be justified.

Just as a general point, its rarely tax efficient to put a leased building into a company, for various reasons.

MrAA

I fully agree & I have had a discussion with a professional or 2.

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.

Again that model would be IMPAIRED if the properties were incorporated there could be serious implications when trying to sell the properties in the future.

That double surcharge on sale is really something.

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

Just one thing if my parents had no PAYE income what rate would there rental income be taxed at?
No PAYE just rental income payed to them as individuals
Lets say €25.000 each?

Thank you for replying

davindub

MrAA wrote: »

I fully agree & I have had a discussion with a professional or 2.

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.

Again that model would be IMPAIRED if the properties were incorporated there could be serious implications when trying to sell the properties in the future.

That double surcharge on sale is really something.

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

Just one thing if my parents had no PAYE income what rate would there rental income be taxed at?
No PAYE just rental income payed to them as individuals
Lets say €25.000 each?

Thank you for replying

Forget about the Ltd, the CT rate on Rental income is 25% and you have the additional compliance and close company surcharge.

Better just to pay the tax on rent as a sole trader.

Regarding tax on 25k, use an online calculator. So many variables but standard answer is 20%

MrAA

Thank you for your input,
Yes I totally agree.

When you say sole trader?
Also is 20% applied after €5000 or €13000 its just I seen if the income is below €5000 its not a tax obligation also if your not a PAYE worker any monies earned above €13000 is an obligation?

davindub

MrAA wrote: »

Thank you for your input,
Yes I totally agree.

When you say sole trader?
Also is 20% applied after €5000 or €13000 its just I seen if the income is below €5000 its not a tax obligation also if your not a PAYE worker any monies earned above €13000 is an obligation?

Sorry, sole trader was a bad phrase to use, but if you don't use a company you will be paying income tax assessed as an individual. If the non paye taxable income is less than 5k you can file a form 12, otherwise it is form 11.

Regarding tax due, use an online calculator. There is no amount that is not accessible to tax, but there are tax credits, income brackets etc that may apply. There will also be PRSI and USC to be assessed.

MrAA

Ah yes so I may have a approach now
Maybe Modernize together as a family & take it from there.

I get the impression there is more content out there to confuse a person instead of pragmatic solutions

Ah yes tax credits I am aware of income brackets PRSI & USC

Thank you for efforts, well appreciated.