Owning property directly or through a company?

[glengoolie]

When it comes to investment into or ownership of properties, I understand that having a company with good tax residency as umbrella for these investments makes sense. But I always wonder, when is it good to own directly and when through a company when it comes to properties to actually live in, especially if you own homes in multiple countries?

I haven't reached the level where this would be my concern, yet, but my philosophy is that I want to own as little as possible, directly. My name should come up only very rarely, especially when it is related to paperwork and government. So I would be in favour of always using a company. I guess the one exception would be my domicile for the purpose of tax residency or citizenship so that I can prove that I actually own a home where I actually live and pay bills and is the "center of life".

What is your philosophy or what is your decision-making process when it comes to this?

 

[glengoolie]

oh, and with property taxes(purchase, own, sell), you can deduct the costs if you own through a company

 

[CaptK]

By having an asset in a company makes it liable for tax in that jurisdiction. Due to the total abuse of the system you will need to show the UBO and the solicitors will require it for AML.

 

[JohnLocke]

CaptK said:
By having an asset in a company makes it liable for tax in that jurisdiction. Due to the total abuse of the system you will need to show the UBO and the solicitors will require it for AML.
Click to expand...

so there is no real benefit doing it unless you can take advantage of any tax reduction or otherwise that may be applicable country specific.

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[CaptK]

Admin said:
so there is no real benefit doing it unless you can take advantage of any tax reduction or otherwise that may be applicable country specific.
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Correct, the other way is to use an offshore company to buy the assets through an onshore company in that jurisdiction. So the company is the UBO. You still have to do AML/KYC source of funds so there is no hiding

 

[CyprusLawyer101]

a few reasons that come to mind:
asset protection - limited liability of the company - no spreading of risk to other assets;
efficiency in management and allowing for financing options with a tax incentives - i.e. third party cash collateral loans etc;
easier to sell your property through selling the shares in the company - this usually results in saving on transfer fees/duties in most jurisdictions and could provide for a capital gain tax savings in some others;
anonimity - and change of hands in anonymity although some land registries around the world might require disclosure of shareholder or ultimate owner;
inheritance planning - as a means to avoid inheritance laws of a foreign country where the property is situated;

It is really a matter of looking at the company on a case by case basis.


hope this helps

 

[Golden Fleece]

glengoolie said:
When it comes to investment into or ownership of properties, I understand that having a company with good tax residency as umbrella for these investments makes sense. But I always wonder, when is it good to own directly and when through a company when it comes to properties to actually live in, especially if you own homes in multiple countries?

I haven't reached the level where this would be my concern, yet, but my philosophy is that I want to own as little as possible, directly. My name should come up only very rarely, especially when it is related to paperwork and government. So I would be in favour of always using a company. I guess the one exception would be my domicile for the purpose of tax residency or citizenship so that I can prove that I actually own a home where I actually live and pay bills and is the "center of life".

What is your philosophy or what is your decision-making process when it comes to this?
Click to expand...

For American citizens, you do not need to report to the IRS any real estate that you own in your own name in a foreign country. On the other hand, any foreign real estate owned by an entity must be reported to the IRS.

So, as others have already mentioned, it depends -- on a case by case basis -- on the laws of your home country, the laws of the country in which the property is located, and your privacy and asset protection goals.

The local attorneys will often try to convince you to set up a local corporation, even if it does not fit your needs. What works for local buyers may not be the optimum solution for you.

 

[glengoolie]

Let's remove countries with citizenship based taxation out of this conversation since there is very few of them and are irrelevant to most people.

 

[Golden Fleece]

glengoolie said:
Let's remove countries with citizenship based taxation out of this conversation since there is very few of them and are irrelevant to most people.
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Everything that I stated in the second and third paragraphs applies in general, not just to U.S. citizens. And the conversation is pretty over much because all the general principles have already been stated. As noted, the specifics apply on a case by case basis.

You could have answered your own question just by doing some research on the web. If you have a specific country in mind where you plan to buy real estate, then that topic is worthy of a thread.

Last edited: Apr 13, 2021

 

[glengoolie]

yeah, i could have just "doing some research on the web". who needs forums these days... right? i mean, do we even need internet? i wonder..since you can just walk outside and ... talk to people directly. why waste electricity and invent things? dunno...food for thought i guess..

 

[Golden Fleece]

glengoolie said:
yeah, i could have just "doing some research on the web". who needs forums these days... right? i mean, do we even need internet? i wonder..since you can just walk outside and ... talk to people directly. why waste electricity and invent things? dunno...food for thought i guess..
Click to expand...

Your response is a non sequitur. Your question was far too general. What works in one country may not work in another. So, the limited information that you received here is very general in nature -- and you could have quickly gotten access to it by simply reading a few articles on the web.

For example, you could hold multiple properties in multiple countries using a Nevis LLC. Then you suddenly discover that your cannot use a Nevis LLC to own real estate in a certain European country, because Nevis is on some list. You may not discover that fact until you go through the closing process, unless you ask a local lawyer in advance of the purchase. Asking such a specific question on a forum, such as this one, can make a great deal of sense and prevent a big hassle.

Last edited: Apr 13, 2021