Using a company structure to settle CAT liabilities with an investment property

Discussion in 'Wills, inheritances and gifts' started by Brendan Burgess, Sep 23, 2018.

  1. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    35,783
    The Irish Times had an article on CAT and property yesterday.

    Death and taxes: what it costs to inherit the family home

    It included the following


    One way to deal with the transfer of investment properties would be to house them in a company structure, as the company cash could then potentially be used to settle CAT charges.

    It gave no further details. I had not heard the suggestion before and I can't see how a company structure might help. I would think that it would make matters worse.

    Brendan
     
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    3,155
    Let’s have a think about that:

    - The company pays 40% tax on the rent (25% corporation tax plus close company surcharge).

    - The shareholder dies, and someone inherits the shares in the company. He/she pays CAT based on the value of the shares.

    - The properties are still trapped in the corporate and the corporate will still pay 33% CGT on the properties if they’re sold.

    - There can be something of an angle if the company is an offshore one, but that’s not what’s been suggested in the article.

    I must admit, I read the article yesterday and thought it was very poor.