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Why isn't every house incorporated (bought by a company, then have that company bought/sold instead of the house) ? Note: this is how it's done for a lot of hou
by iofj 11y ago
Why isn't every house incorporated (bought by a company, then have that company bought/sold instead of the house) ? Note: this is how it's done for a lot of houses in western europe, and there it's a 100% legal way to avoid this tax.
The problem is that you're going to have to pay 30% company tax on profits, and it's hard to get a mortgage. However this can always be structured so there aren't any profits (e.g. by improving the house, saving up for another house, ...)
- eru 11y agoYour primary owner-occupied residence is exempt from capital gains tax in Australia. If you put a corporation in the middle, that exemption might vanish? (I don't know too much about the legal shenanigans here.)
- throweway 11y agoCorrect plus you have corp fees and i dont think you can negative gear (claim losses aginst personal income tax) either if you decide to rent it out.
- iofj 11y agoHow does that work ? Do you have to pay capital gains on a house before you sell it ? The point of this construction is to never sell the house, so that might be avoided here as well.
- eru 11y agoGood question. I don't know too much about Australia. Only moved here two years ago and don't plan on staying long term.
- jpollock 11y agoI've read that Californian municipalities say that transferring control of the company that owns a property results in the underlying property being valued at current market prices. They'll get their tax regardless.
- throweway 11y agoNot sure how that would work for an owner occupier? Can a company provide free accomodation to it's director?