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Tax treatment for a limited company landlord who also does contract work

  • 26-10-2020 7:11pm
    #1
    theLargeBeast
    Registered Users Posts: 3 ✭


    I am not far off getting a mortgage on my first home in Dublin which I hope to rent a couple of rooms out in. I'm determined I will buy a property soon before leaving my current job but a recent opportunity of doing contract has come up.

    To accept this job I need to work through an agency or set up my own limited company but the money is very good and it is hard to turn down.

    I would intend to pay myself a small salary from my limited company (I understand the income tax that is paid here, not sure about employers PRSI?) and invest the rest straight into rental property or renovations owned by the same limited company.

    My question is do I need to pay tax on this income before I spend it on property within the limited company?

    Effectively it would be a company that made no profits and I would just pay tax on the salary I paid myself.
    Tagged:


Comments

  • #2
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    theLargeBeast wrote: »
    I am not far off getting a mortgage on my first home in Dublin
    Best of luck getting a mortgage whilst self employed.


  • #3
    Carter D
    Banned (with Prison Access) Posts: 31 ✭Carter D


    the_syco wrote: »
    Best of luck getting a mortgage whilst self employed.


    Why would it be hard to get a mortgage if self employed?
    Once they have
    3 years' financial accounts certified by an accountant. 6 months' bank statements. 3 years' Revenue Notices of Assessment and Tax Clearance confirmation


  • #4
    10pennymixup
    Registered Users Posts: 516 ✭✭✭10pennymixup


    Carter D wrote: »
    Why would it be hard to get a mortgage if self employed?
    Once they have
    3 years' financial accounts certified by an accountant. 6 months' bank statements. 3 years' Revenue Notices of Assessment and Tax Clearance confirmation

    There could be an issue with going self employed, what's on the banks website doesn't always happen in reality.

    I know definitely that up to a three years ago it was a very big problem and you hadn't a snowballs chance in hell if you were self employed.


  • #5
    Carter D
    Banned (with Prison Access) Posts: 31 ✭Carter D


    10pennymixup wrote: »
    There could be an issue with going self employed, what's on the banks website doesn't always happen in reality.

    I know definitely that up to a three years ago it was a very big problem and you hadn't a snowballs chance in hell if you were self employed.



    So it would be better to stay in a job until get a mortgage then go self employed if wanted to ?


  • #6
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    theLargeBeast wrote: »
    Effectively it would be a company that made no profits and I would just pay tax on the salary I paid myself.

    The company would be making profits you'd just be spending them on property.

    Talk to an accountant who will explain why this is a bad idea.


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  • #7
    theLargeBeast
    Registered Users Posts: 3 ✭theLargeBeast


    Carter D wrote: »
    So it would be better to stay in a job until get a mortgage then go self employed if wanted to ?

    I'd definitely agree with you there and that is the intent. I'm optimistic that the opportunity I mentioned or a similar one will still be there in 6 months time.


  • #8
    theLargeBeast
    Registered Users Posts: 3 ✭theLargeBeast


    Graham wrote: »
    The company would be making profits you'd just be spending them on property.

    Talk to an accountant who will explain why this is a bad idea.

    But it would be within the company and the company would own the property.

    I understand it's not going to be simple to get the property back out of the company if I decided I wanted to take personal ownership of it down the line. I am thinking of trying to grow a portfolio within the umbrella of a company largely tax free if it is possible.

    Absolutely I'll get advice but this is early stage research at the moment and its difficult to get information on.


  • #9
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    theLargeBeast wrote: »
    I understand it's not going to be simple to get the property back out of the company if I decided I wanted to take personal ownership of it down the line. I am thinking of trying to grow a portfolio within the umbrella of a company largely tax free if it is possible.

    Absolutely I'll get advice but this is early stage research at the moment and its difficult to get information on.

    Company would pay tax on profits before getting to spend it on property.
    Tax on rental profits
    Tax on undistributed profits
    CGT on sale of property, personal tax/CGT on whatever remains when you take it out.

    Make an appointment with an accountant/tax consultant for an hour.


  • #10
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    theLargeBeast wrote: »
    But it would be within the company and the company would own the property.
    If the business goes bankrupt, wouldn't the house be seen as an asset to cover any debt owed?


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