Rent to Rent Tax

[Property2022]

Hi,

Can I setup a property company and 'rent to rent' my personal property? I.e. my company rents my property from me for 500 euros per month and my company rents out the property to a tenant for 1500 a month?

Thanks.

 

[Brendan Burgess]

Why would you do that?

Do you know how difficult it is to get rid of a tenant?
Can you imagine how much more difficult it is for a company?

Do you understand the tax implications of having a company?

Do you understand the huge admin burden?

Brendan

 

[Property2022]

To save on tax

 

[Property2022]

I do know how hard it is to get rid of a tenant, why would it matter if the tenant was renting from me directly or via a company I own?

Yes I understand the tax implications, 55% personal Vs 25% (or lower corporation tax), with the ability to extract money from the company tax free through pension or reinvest in other assets.

Plus accounting fees, a couple thousand a year...

 

[Brendan Burgess]

To save on tax

You don't.

Brendan

 

[relax carry on]

Hi,

Can I setup a property company and 'rent to rent' my personal property? I.e. my company rents my property from me for 500 euros per month and my company rents out the property to a tenant for 1500 a month?

Thanks.

So the company pays 25% CT on the rental profit and you then pay income tax on the profit extracted from the company? What exactly is the point of this idea?

 

[Property2022]

Leave the money in the company to reinvest in more property and / or pump money into a director's pension tax free (a large enough portion of which can be extracted in a lump sum when you retire)...

 

[T McGibney]

Leave the money in the company to reinvest in more property

In that case, your company will be paying 45% corporation tax once the close company surcharge is included.

and / or pump money into a director's pension tax free (a large enough portion of which can be extracted in a lump sum when you retire)...

Not allowed in respect of proceeds of rental income.

 

[Property2022]

In that case, your company will be paying 45% corporation tax once the close company surcharge is included.

Not allowed in respect of proceeds of rental income.

 

[Property2022]

Thanks for that answer....Are there any ways to avoid the close company surcharges / additional taxes?

 

[T McGibney]

Thanks for that answer....Are there any ways to avoid the close company surcharges / additional taxes?

Not really. There's a reason why you're having to ask these questions in the first instance - if it was workable, many more people would be doing it already.

 

[Brendan Burgess]

Are there any ways to avoid the close company surcharges / additional taxes?

Yes. Rent out the property in your own name and avoid the tax, legal and bureaucratic disadvantages of a limited company.

Brendan

 

[Brendan Burgess]

There's a reason why you're having to ask these questions in the first instance

+1