Property Investment abroad through Irish limited company

[sandyh2001in]

Hi

I have accumulated profits in my limited company and considering clearing them down for Corporation tax purposes by purchasing property abroad (in a low cost economy hopefully).

Could someone tell me if this is a good idea? The plan is to hold the properties for the long term and rent them out to get additional income.

Thank you

 

[Brendan Burgess]

clearing them down for Corporation tax purposes by purchasing property abroad

I don't understand what this means.

In the current tax year, you can pay yourself additional salary to reduce your taxable profits for this year (or last year by creating a loss).

Buying an asset does not affect the taxable profits of this year or last year.

If you have accumulated cash in the company, it is very difficult to extricate in a tax efficient manner. Converting it into property does not do this. The asset stays in the company.

Should you use cash in a company to buy property. Probably not. It's discussed at length in other key posts, but in general the tax issues and the legal issues would be very complex and exensive to administer.

 

[sandyh2001in]

Additional Salary is not an attractive option because tax outgo would be at the highest rate.

If accumulated profit is 50 K and if I buy a property abroad for 50 K, the taxable profit in company goes down to ZERO is it not?

A property bought in the name of the company for the long term, keeps generating income in the form of rents.

Sure, this could be done with the money after extracting as salary and buying property but then there is an upfront difference of tax rates (12.5% CT v/s 47 % income tax) ?

 

[Brendan Burgess]

If accumulated profit is 50 K and if I buy a property abroad for 50 K, the taxable profit in company goes down to ZERO is it not?

No. As I said.

Buying an asset does not affect the taxable profits of this year or last year.

It is explained fairly clearly in the Key Posts on the topic.