Always Learning
Registered User
- Messages
- 142
Maybe the situation is different when flipping properties after upgrading them as opposed to holding and renting them, but these threads may be worth checking?Setup a Ltd. company / partnership etc.?
Hardly. Property development is a high-risk venture at the best of times, let alone amid runaway cost inflation and talk of possible recession.It seems a lot simpler to do it in your name or your joint names instead of through a limited company.
Thanks Clubman, however, I believe this would be treated differently to buying a property and renting it out. I understand that has been well covered here and the answer would seem, in that case, always do it in your own name. However, renovating / refurbishing and selling on would be treated differently to rental income, at least I think it would? If that is the case then I'm wondering what is the best way to structure it.Maybe the situation is different when flipping properties after upgrading them as opposed to holding and renting them, but these threads may be worth checking?
Key Post - Is there any merit in setting up a company to invest in property?
Hi, I am currently looking at investing in property and hoping to buy and appartment/house in Galway. I am also looking at a property with some commercial potential but needs some work. What I am wondering if it is worthwhile purchasing a property via a Ltd company and if there are any...www.askaboutmoney.comBuying a property through a company - any advice
A colleague is considering buying a second home primarily for his wife to use during the week for work in Dublin They have a primary residence outside of Dublin. Her husband has some money in a company that could be used to part fund this second home. It would not be a BTL. Are there any tax...www.askaboutmoney.comPurchasing a residential property through a profitable Limited Company
Hello All; I have seen some posts on this but I am not sure if this particular scenario has been covered. I have put some figures together on this. I am not sure that I have all the bases covered. I would welcome any input regards anything that I have not thought of.I am not an accountant so...www.askaboutmoney.comBuying a residential property through a company
i am a director of a cash rich company and have recently purchased a 5 bed residential house for the company for 260k can i claim any vat back off this property price for the company or is this not allowed .www.askaboutmoney.com
That's not a problem, my partner / friend in this scenario is the MD or a decent size building company.Get trades lined up as certain things need registered trades people.
We identify a property and purchase it. The first one will be 120 - 125K
- I will fund the purchase
- My friend will renovate and arrange grants
- We sell the property, aiming for 175 - 180K on this one.
- We divide the profits according to a pre-agreed split
Acquisition | €120k |
Materials | €20k |
Sale | €180k |
Capital gain | €60k |
CGT@33% | €20k |
Hardly. Property development is a high-risk venture at the best of times, let alone amid runaway cost inflation and talk of possible recession.
Limited liability is king,
Hi Coyote,I'm not even sure the business model makes sense. I'm assuming your friend can add value via a labour:materials split of 2:1
Acquisition €120k Materials €20k Sale €180k Capital gain €60k CGT@33% €20k
So you add value of €60k but €20k of that is materials and another €20k is CGT. I've assumed away EA, legal, stamp, duty, etc but also personal exemption for simplicity.
Bottom line you add €40k of value but lose half of it in tax. That's the same as being an employee but with far less risk
It would help if you told us a bit more. Who will do the work? Your partner and/or workers from his firm?So for the purpose of this exercise, just assume I'm safe on that front. I'm interested purely from the point of view of taxes / distributing profits
House prices in Ireland are volatile. Over the course of a year the typical swings in the market could add or subtract €20k from your expected sale price. Add to this potential for construction inflation, one of you falling ill, the two of you falling out, cost overruns due to an unanticipated problem in the house, etc.I don't think it will be a very high risk venture.
Hi,Hi McGibney,
For this venture, at least for the first, I don't think it will be a very high risk venture. The first one we have identified will be a cash purchase, it's well below the market value of a nice place in the area. My partner has spent his entire career in construction and has costed the job. I'm not too worried on that front, if it were an absolute disaster then we would break even in the worst case scenario. So for the purpose of this exercise, just assume I'm safe on that front. I'm interested purely from the point of view of taxes / distributing profits, what is the smartest way to set this up to get the best monetary gain.
Not a hope in hell of CGT applying to this. It's clearly a trade so it will be income tax or corporation tax.So you add value of €60k but €20k of that is materials and another €20k is CGT. I've assumed away EA, legal, stamp, duty, etc but also personal exemption for simplicity.
Bottom line you add €40k of value but lose half of it in tax. That's the same as being an employee but with far less risk
The workers from his firm. Or at least that's what we had envisaged unless there is a reason that won't work? We can be flexible on that front.It would help if you told us a bit more. Who will do the work? Your partner and/or workers from his firm?
House prices in Ireland are volatile. Over the course of a year the typical swings in the market could add or subtract €20k from your expected sale price. Add to this potential for construction inflation, one of you falling ill, the two of you falling out, cost overruns due to an unanticipated problem in the house, etc.
I do have a tax consultant that I use for other issues. I'm meeting with him next week on some other matters and I've highlighted this new venture to him in advance so that I can get advice off him at that meeting also. However, I like to get several opinions on things hence the post here, it also helps to have some idea of the potential pros and cons of the ideas my tax guy will probably put forward ahead of time also. Having a basic idea beforehand will allow a more in depth discussion at the timeI expect you'll have to pay good money for proper tax planning and tax risk management strategies.
It's impossible to give proper advice here as we haven't the first clue of your circumstances, nor of your level of experience in construction and business generally.I do have a tax consultant that I use for other issues. I'm meeting with him next week on some other matters and I've highlighted this new venture to him in advance so that I can get advice off him at that meeting also. However, I like to get several opinions on things hence the post here, it also helps to have some idea of the potential pros and cons of the ideas my tax guy will probably put forward ahead of time also. Having a basic idea beforehand will allow a more in depth discussion at the time
The terms of the specific grant scheme might determine if the house can be owned by a company or if it must be owned privately.The renovation will be almost entirely covered by grants, there is a grant of between 30-50K available.
The terms of the specific grant scheme might determine if the house can be owned by a company or if it must be owned privately.
If you can't advise that's fine, thanks for the responses nonetheless. However, I would have thought that the correct structure is the correct structure. No matter what my background, surely if it is better from a tax perspective to do this as a sole trader for example, then that is the correct way to do it and whether I'm Richard Branson or Joe Soap wouldn't affect what is the right approach?It's impossible to give proper advice here as we haven't the first clue of your circumstances, nor of your level of experience in construction and business generally.
It's not.As you say though, if it's not something that can be easily advised on an internet board that's fine.
No matter what my background, surely if it is better from a tax perspective to do this as a sole trader for example, then that is the correct way to do it
To be frank, of course it would affect the approach. Branson for example won't have to withdraw funds from the enterprise to pay his own bills whereas Mr Soap might.and whether I'm Richard Branson or Joe Soap wouldn't affect what is the right approach?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?