Can a company I own buy a residential property jointly with me?

S

Shagab

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Hi All,

I am planning to buy a residential property worth 200k. I have personal savings of 100k and I also own a limited company 100% that has around 150k. Can I use this company to co-invest or loan me interest free to buy this property? I have my wife in the payroll of this company, from whose paycheck the company can continue to cut towards this coinvestment.

Is this possible?
I would prefer the property to b registered in my name.

Regards
Shagan
 
Because I don't want to take separate personal/mortgage loan.
Company has money that is of nearly no future use. I would have just continued to take salary in my wife's name under low tax bracket till this cash is wiped off over years.
But I cannot liquidate the company coz I have continuing contracts.
 
I am sure that it would be legally possible but it would make no sense.
  1. If it's your home, you would be subject to BIK from the company
  2. If it's your home, you would CGT exemption on any increase in value, but the company would not.
  3. Revenue would be very concerned with it and you would probably have an audit even if it's perfectly legit.
  4. If it's a buy to let, it would be very awkward with leases and with legal action if you have to pursue tenants.
Overall, it's a very bad idea to hold investment property through a company.


So you need to ask you accountant why you have €150k cash in the company? It probably should have been paid out as salary in the year it arose.

You paid Corporation Tax on the profits. And now you will be subject to income taxes on it when it is paid out to you.

But you should face that problem now and take it out of the company.

You need to study the interaction of income tax and corporation tax and how to best use profits in a company so that you are aware of how to minimise the tax hit. Too many people say "Corporation Tax is lower than Income Tax, so I will leave it in the company". Then they hit the problem you face now.

The company should not lend you money interest free. It will be subject to Benefit in Kind. It will attract the attention of the ODCE and Revenue.

What is your business? Should it be in a company at all?

Brendan
 
I see the angle.

Your wife does some "secretarial" work and manages the accounts and you "hope one day to revitalise the business, so not closing it at present" :)
Your wife is paid €18,000 a year and in about 8 years you'll decide that it's not needed and will close it up and take the few hundred euro left in the account out.

Best option is to use the falling balance as a guarantee to the bank and take out an 8 year secured loan/ mortgage.
 
Shagab said:
But I cannot liquidate the company coz I have continuing contracts.
Click to expand...

Are you sure you can't liquidate the company?

That could be the best way to get the cash out.

I am sure that the other side won't mind if you transfer the contract into your own name.

Brendan
 
Shagab said:
I would prefer the property to b registered in my name.
Click to expand...

That seems a bit strange to me. One thing you haven't told us is why you want to become a landlord, also how much is the rent going to be?
 
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