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Operating Business out of a private House

  • 16-06-2005 5:12pm
    #1
    craggel
    Closed Accounts Posts: 51 ✭✭


    I'm looking into taking over a relatives' business which he operates out of a workshop in his own house. As I would have to find my own premises to operate out of and my own house garage is too small to even contemplate I was looking at the possibility of purchasing a larger property with garage/ w/shop on the land and somehow 'renting' the said garage/ w/shop out to the business and help reduce mortgage repayments.
    Was wondering if anyone has tried this or knows of the benefits/ downsides of doing something like this.
    Thanks in advance.


Comments

  • #2
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    You can do this, but it and the net effect will be to reduce your immediate income tax liability.

    However, this will have serious tax implications down the line, because you will have to pay capital gains tax down the line.

    You can charge a proportionate amount of the house expenses to the business without any issue of CGT arising.

    All my opinion, of course, check it out with an accountant.

    All the usual issues of planning, noise, etc. that go with a business at home apply, of course. Might be worth considering renting out a small premises to get yourself going ...


  • #3
    Kinetic^
    Closed Accounts Posts: 13,249 ✭✭✭✭Kinetic^


    If you are looking to get a business premises, then i suggest you get it in your own name and charge the company rent. This may seem crazy but if you put it in the company's name and say 10 years down the line you want ot sell the company, you will have to sell the premises, you'll pay capital gains tax on that, then when you're taking all the money from the company (which includes the gain on the premises less the capital gains tax paid) you'll pay capital gains tax again, so you'll get hit twice on the money earned on the premises, you can also earn rent even if you sell the business.


  • #4
    Victor
    Registered Users, Registered Users 2 Posts: 78,580 ✭✭✭✭Victor


    Can the business be continued in the existing premises?


  • #5
    craggel
    Closed Accounts Posts: 51 ✭✭craggel


    I couldn't really continue in the existing premises as I would be looking at expanding the business by employing someone and I can't imagine the relatives family being too happy with some stranger having access to their house.


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