Can landlord assign his lease to trading co?

[BronYrAur]

Hi all

I am the LL and am currently renting my property out. I'm currently working in a job where my total taxes (including rent) are just inside the 40% bracket but I will be changing jobs soon which will take me well inside the 40% bracket and so all of my rental income will be taxed at 40%.

I was wondering about the possiblity of transferring my interests and obligations under the lease to a company that I have set up for my employment. It's just a one-man company for freelancing.

Is it then 20% or 25% corp tax? Do I then get landed with 40%+ if I try pay myself from the company too? Perhaps I can set up a pension from the company but is the rental income just subject to a 20% flat fee?

Am I best off to just take the 40+% hit as keeping the rental agreement in my name or any tax planning that could help?

Thanks!

 

[T McGibney]

Your plan unfortunately won't work and would be likely to unleash a lot of double taxation, trouble and unproductive cost on you and your company. You really need to engage a good accountant or tax advisor to avoid making an expensive mistake in the future.

 

[BronYrAur]

Your plan unfortunately won't work and would be likely to unleash a lot of double taxation, trouble and unproductive cost on you and your company. You really need to engage a good accountant or tax advisor to avoid making an expensive mistake in the future.

Thanks, I haven't made the mistake as yet but was just sounding it out at the moment.

I'd certainly like to understand some specifics of what you mean by trouble and unproductive cost though?

I think it's just a simple decision as to whether I want that portion of my income to come to me directly or to go into my trading company - much in the same way as when you start as a freelancer/consultant to decide if incorporation is right for you or if opearting as a sole trader suits better. That decision is largely taken with tax planning in mind. It would also then help that I wold only ned to do tax returns for the company every year and not separate ones for me too.

Here, if the income comes directly to me, it will be taxed at 40%. If I asign the lease to the Company then the income is charged at 25% (I think).

So it makes sense up until this point.

The question then is, is it a waste of time and expense becuase if I want to get that income then it will be double taxed if I withdraw it? Or, can I take that extra 15% and put it into a pension, a self-directed pension for example. If that was possible, then I could be putting that 15% of the rental into the pension every month and it would definitely be worthwhile doing that in the long term.

I'm more than happy to accept if any of that is wrong but it would be helpful to know what I am missing.

And of course, while going to a good accountant or tax planner is always sage advice, that advice could be given to almost every question that comes up on this forum.

 

[NoRegretsCoyote]

This thread may be instructive:

Property and corporate tax

Hi Let me start by giving some background to see can anyone answer the question I have. I have a property in Ireland I'm renting for around 3000 a month. Now if I put this in a company I need to pay 25% in tax instead of 40% + UCS + PRSI. (as I have other income not just the property) My...

www.askaboutmoney.com

 

[BronYrAur]

This thread may be instructive:

Property and corporate tax

Hi Let me start by giving some background to see can anyone answer the question I have. I have a property in Ireland I'm renting for around 3000 a month. Now if I put this in a company I need to pay 25% in tax instead of 40% + UCS + PRSI. (as I have other income not just the property) My...

www.askaboutmoney.com

Thanks. Not sure it was quite on point.

For the avoidance of doubt, I will only be assigning the rights and obligations of the lease to the company, not the property itself.

The property is already rented so there will be CGT anyway.
I dont think stamp duty applies as there will be no sale but open to correction on that.
CGT when I liquidate the company will be an issue anyways as it will be receiving trading income (a portion of which I will be looking to put into a pension anyway).

Definitly keen to avoid this if it doesn't work, but I don't yet understand why it doesn't work.

Appreciate the replies.

 

[T McGibney]

And of course, while going to a good accountant or tax planner is always sage advice, that advice could be given to almost every question that comes up on this forum.

The specific problem here is that your question as a whole is too complex and intricate to answer fully without significant effort, and as such is more in the realm of what a professional consultation would entail.