Property company with crypto assets buying and selling

H

happyM

Registered User
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Hi,

Have a company that generally collects rental income. With this rental income it tends to buy crypto currencies.

Now i have a gain i would like to realise and to bet on another cryptocurrency.

If i sell the token i am liable to CGT presumably?

If i buy another token and i record a loss on this presumably i can offset the CGT ?

Presumably as main trade of company is not crypto it is not classified as corporation tax relevant but CGT ?

Is there anything i need to watch out for ?
 
Yes, why do you have a property in a company?

It's not a good idea and you should try to resolve this as a first priority.

For example, if you have capital gains in the company, the company pays Capital Gains Tax and then the company is more valuable by the net amount after CGT, and you pay CGT on this when you eventually access the money into your personal account.

Second, if you are stuck with the property in the company, ,why are you building up cash in it? Take it out and pay tax on it once rather than twice.

Brendan
 
Hi Brendan,

Generally not having property in a company is great advice and in 95%+ of the cases i think its better.

However in my case it may make some sense.

For instance i made around 500k on some shares (equity) that were wrapped in a company if i had withdrawn the cash fully i would have been hit with dividend income for instance of 1/3 bringing the 500k to 335k. So instead i lent the 500k money via a holding company and bought 2 properties for cash. These produce approximately 48-50k per year. I am of the opinion possible 1-2% appreciation maximum and that yield should be driven by cashflow. Obviously if i personally owned this i would be only able to produce 33k a year (based on 10% yield).

Circumstances of having a company can change depending on your residency and it is possible that i am in a very tax appealing place when i go to withdraw the funds (in 15-20 years). Hence the reason.

Also tax at higher rate on the income is possibly much higher than 42% which impacts on the amount you can invest monthly into the markets.

Typically i have property and very high risk things on a smaller scale (crypto) and big wins go into property which can act as a pension in the future. I love index funds etc but find standard equity markets strongly valued but i could be well wrong on this!

Already i have a good income so i dont need the money out this is more my play thing and i have no issue in paying the tax that is needed to service society schools etc. Obviously the dividend will have to be paid on the below fees on withdrawel but this is just life.


​
Tax 25%​
Tax 42%+​
Tax 25%​
Tax 42%+​
​
​
​
​
​
Rent​
50000​
50000​
50000​
50000​
After Tax​
37500​
29000​
37500​
29000​
Monthly Investment amount​
3125​
2416.6666666667​
3125​
2416.6666666667​
Compound invested rate​
8.00%​
8.00%​
8.00%​
15.00%​
​
​
​
​
​
15 Years compounded monthly​
1205379​
931912​
2439946.17​
1886446.03​

Back to my original question though its okay to pay CGT on the crypto and then take another chance on crypto and if it fails i have a loss?
 
Its an entity of a holding company . You can give dividends back to holding company at 0% depending on jurisdiction.
 
OK

I had assumed that the property and the company were in Ireland.

If they are both abroad, then you would need very specialist tax advice on the taxation of capital gains or losses on crypto speculation.

If the property is in Ireland, I think it's subject to CGT irrespective of the residence of the ownership but, again, you need to verify this with specialist tax advice.

Brendan
 
happyM said:
its okay to pay CGT on the crypto and then take another chance on crypto and if it fails i have a loss?
Click to expand...

Again not sure about the situation in overseas companies.

If an individual makes a capital loss in Ireland, they can carry it forward against future gains.

But they cannot carry a capital loss back against gains in earlier years and get a refund of CGT.

Brendan
 
So should make sure the gain and loss happens in same year Brendan again thanks for that. Useful information i contacted the accountant anyways but good to know.

"Again not sure about the situation in overseas companies." Irish company is owned by UK holding company hence the dividend 0% tax for dispersion of funds to UK. (Pre Brexit / Pre EU tax law.)
 
happyM said:
Its an entity of a holding company . You can give dividends back to holding company at 0% depending on jurisdiction.
Click to expand...
How do you get the money out of the holding company without paying additional tax?
 
I dont mind paying additional tax if i recieve as a dividend myself. The only reason i have it setup like this is predominately because i believe it can make sense for compounding on a 15-20 year horizon. I dont believe in property appreciation personally i only think fine 1-2% a year is acceptable but yield for me is everything. On other side i deal with very high volatility crypto so that suits my profile.

But there is a way and everyones situation is different, but generally you would have to be non-resident everywhere which takes a certain amount of time etc and is not always possible depending on family life commitments etc. You would have to seek financial advice of very high quality to be sure the boxes etc were filled out correctly.
 
"But they cannot carry a capital loss back against gains in earlier years and get a refund of CGT." - So brendan same year is fine im assuming thanks for that as i say i contacted my accountant anyways but this is great to know :)
 
Yes, capital losses can be set against gains made in the same year.

Some people who have made capital gains but who have unrealised losses on other assets, sell the other assets before the year-end to avail of this set-off.

Brendan
 
happyM said:
Its an entity of a holding company . You can give dividends back to holding company at 0% depending on jurisdiction.
Click to expand...
happyM said:
same year is fine im assuming thanks for that as i say i contacted my accountant anyways but this is great to know :)
Click to expand...

I am struck by the incongruity of such advanced tax planning while at the same time not knowing the basics.

Given the amounts involved I would definitely be paying a tax specialist and not relying on a general accountant in practice.

Brendan
 
Very fair point you make though but i tend to only question them when needed. (opportunity just arose imo). Just wanted to make sure in general my understanding was correct. In some countries its CGT then no write off on losses especially concerning crypto.

Have no issue paying tax quite happy to for years i paid little so not looking to skin taxman alive!
 
Brendan Burgess said:
I am struck by the incongruity of such advanced tax planning while at the same time not knowing the basics.

Given the amounts involved I would definitely be paying a tax specialist and not relying on a general accountant in practice.

Brendan
Click to expand...
Or an Internet forum.
 
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