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

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

  1. Brendan Burgess

    Brendan Burgess Founder

    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.

  2. Gordon Gekko

    Gordon Gekko Frequent Poster

    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.