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16-10-2020, 20:50   #1
poker--addict
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Landlords/Developer: Private company required?

Hi all,

Private landlord, or setup a company?

The age old debate i suspect, but I could not locate a thread dicussing the subject of whether a landlord should have a limited company or not. Can anyone recall one (a good one) and share a link, or offer their own experience?

Some research has generated mixed results in terms of professional advice, so it doesnt seem to be a question with an simple or right/wrong answer?

For the most part the commecrial activity in mind is buy-to-let, with a view to having a few properties accumulated over a period of several years. Very occasionally the activity might involve a renovate/ flip. The two activities might not need to take place under the same entity. At least that is the basis of thinking for which I am doing my research on. The properties would likely fall on the side of higher value so lower yield, as oppossed to a focus on max short-term yield- I say this as it might be relevant to the structure one selects given the considerations around tax and realising maximum return when retiring.

Thank you
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18-10-2020, 00:13   #2
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18-10-2020, 09:00   #3
Graham
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There are very few circumstances where a company is the better option.

Effective tax rates over the long term are almost always higher through a company.
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18-10-2020, 11:07   #4
poker--addict
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Graham, thanks. Would you say it differs if you have say 2 properties compared to 10? Or if you have a higher cash return after finance paid off each month?
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18-10-2020, 11:15   #5
Graham
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I wouldn't but speak to a tax adviser regarding your specific circumstances.

A company generally means you are paying tax twice, once as the company, again when you take money out of the company.
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18-10-2020, 11:19   #6
RachelsCousin
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Quote:
Originally Posted by poker--addict View Post

Some research has generated mixed results in terms of professional advice, so it doesnt seem to be a question with an simple or right/wrong answer?
Were they all Irish sites you were looking at? It would take very specific circumstances for a company to make sense.

There are close company rules which closed any income tax loopholes. You can't accumulate cash within the company without paying high tax on it bringing it in line with income tax.

The biggest reason against holding property within a company is double capital gains tax. If the property value appreciates over time, the company will pay CGT on disposal, and then you pat tax getting the money out, with no relief fund the tax paid by the company. There may be some limited reliefs available, but generally residential rental property should be held outside a company.

The only exception, since you mentioned retirement planning, is to hold via a pension vehicle.
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