Purchasing a buy to let in Ireland through a UK based limited company

N

nbc

Registered User
Messages
286
Hi
Im wondering if this is wise- I've seen entries here previously where Brendan Burgess advised never to buy property through an Irish limited company.
So- I'm a Uk resident currently- Im considering a 300K purchase in Ireland - deposit of 75k borrowing 75% interest at 4%

Rental income E24000
Mortgage interest E 9000 ( in UK mortgage interest is no longer tax deductable when you buy in your own name- 20% of interest paid is allowed as a tax credit)
Tax ( assuming 0 expenses for illustrative purposes) E24k -9K = 15K x19% = almost 3K
E12000 profit a year- after 10 years E120000- withdraw for personal use as dividends- tax rate 39% so net profit = E73 k approx

If I buy in my name
Rental income E24000
Tax 45% of E24000= almost E11k ( 20% credit on interest = 2k approx) Net tax 9k
Interest E9000
E6000 profit a year- after 10 years E60000

Net difference E13k

Limited company seems better but not by a whole pile?- am I missing anything obvious?
Im sure buying through limited company's other advantages not listed here- for example using the build up in funds to purchase another property- I will seek professional advice. But thought I'd ask here first!

Regards
nbc
 
nbc said:
I will pay Irish tax in first instance but get a credit for it but ultimately yes it's the UK tax that's relevant to me.
Click to expand...
Only at 20% plus USC if you are the landlord.

You'll also need to check the corporate residence of the company and how it impacts on that.

Personally, I think you'd be crazy to invest using a company, but that's your call.
 
Given you only have 75K (25%) in cash, why bother? seems barely worth the hassle and risk.
I would be surprised if there are no better business opportunities to invest in that gives you that type of return.
 
RedOnion said:
Where are you getting this mortgage? At least rerun with realistic numbers.
Click to expand...
im not
T McGibney said:
Only at 20% plus USC.

You'll also need to check the corporate residence of the company and how it impacts on that.

Personally, I think you'd be crazy to invest using a company, but that's your call.
Click to expand...
newirishman said:
Given you only have 75K (25%) in cash, why bother? seems barely worth the hassle and risk.
I would be surprised if there are no better business opportunities to invest in that gives you that type of return.
Click to expand...
T McGibney said:
Only at 20% plus USC if you are the landlord.

You'll also need to check the corporate residence of the company and how it impacts on that.

Personally, I think you'd be crazy to invest using a company, but that's your call.
Click to expand...
I get credit for USC
The company will be UK resided so UK tax law
Why crazy?
 
RedOnion said:
Where are you getting this mortgage? At least rerun with realistic numbers.
Click to expand...
I wont be borrowing from a bank- so no mortgage. The E225k will be lent to the company at 4% from myself and a family member .
 
nbc said:
Why crazy?
Click to expand...
Double taxation on future capital gains
Corporate residence uncertainty
Necessity for costly professional advice relative to the sum you're investing.
Heavily negative buy-to-let enviroment here.
 
nbc said:
I wont be borrowing from a bank- so no mortgage. The E225k will be lent to the company at 4% from myself and a family member .
Click to expand...
Why would you ser up a company to do that? You're taking money out of your left pocket to put it into your right pocket. Yes, the interest would be tax deductible for the company, but creates taxable income for you.
You've obviously thought of something I'm missing if you think it's not crazy.
 
T McGibney said:
Double taxation on future capital gains
Corporate residence uncertainty
Necessity for costly professional advice relative to the sum you're investing.
Heavily negative buy-to-let enviroment here.
Click to expand...
Thanks for that
Can you explain what you mean by corporate residence uncertainty? If I move back to Ireland I will close the company and pay uk tax on withdrawing the funds as Ive included in my example
Thanks for the CGT advice- assuming there is a gain is it normal to have to pay CGT in both countries- there's no agreement in relation to this unlike income tax?
 
nbc said:
Can you explain what you mean by corporate residence uncertainty? If I move back to Ireland I will close the company and pay uk tax on withdrawing the funds as Ive included in my example
Click to expand...
It means what it means, and you'll probably have to pay for good advice to get to the bottom of it.
Put it this way, if your company is deemed to be UK-resident and the properties are in Ireland, which country has primary taxing rights and how does the DTT work?

nbc said:
Thanks for the CGT advice- assuming there is a gain is it normal to have to pay CGT in both countries- there's no agreement in relation to this unlike income tax?
Click to expand...
Again you'll have to get proper advice on this.
 
RedOnion said:
Why would you ser up a company to do that? You're taking money out of your left pocket to put it into your right pocket. Yes, the interest would be tax deductible for the company, but creates taxable income for you.
You've obviously thought of something I'm missing if you think it's not crazy.
Click to expand...
My idea was to possibly also use this company to make other investments in the uk.
My main interest was the treatment of interest- being allowable for a company basically and not as an individual but you feel there's no advantage at the end of the day when all the calculations are done and if I was to proceed it would be simpler to do in my own name?Would that be a fair summation?
 
T McGibney said:
It means what it means, and you'll probably have to pay for good advice to get to the bottom of it.
Put it this way, if your company is deemed to be UK-resident and the properties are in Ireland, which country has primary taxing rights and how does the DTT work?


Again you'll have to get proper advice on this.
Click to expand...
Thanks for pointing this out!!
 
nbc said:
My main interest was the treatment of interest- being allowable for a company basically and not as an individual but you feel there's no advantage at the end of the day when all the calculations are done and if I was to proceed it would be simpler to do in my own name?Would that be a fair summation?
Click to expand...
Yes, if you're not actually borrowing money, any perceived advantage disappears completely.
And you lumber yourself with the extra cost of compliance for no benefit.
 
You must log in or register to reply here.
Back
Top