Advantages of Buying Property in a Company
Category Buying Advice
Buying property in a company's name is often a good way to get a large return on your investment. When you buy property in a company's name, you will not technically be the owner of the property. But you will be able to enjoy the income that the property generates. This article will provide an overview of how to buy property in a company's name, the advantages and disadvantages of doing so and some considerations to keep in mind when making a decision to buy property in a company's name.
Buying Property in a Company Reduces Risk
Buying a property as a company provides protection from personal insolvency. This means that, if you become insolvent, your company will be able to continue operating as usual and will not be affected. This protects you from the risk of losing your property. It also protects you from the risk of having to pay a personal creditor instead of a company creditor if you become insolvent.
Buying Property in a Company Lowers Tax Exposure
Buying Cape Town property as a company can also reduce your tax exposure. When you buy property in a company's name, you are able to take advantage of the tax reduction available to companies. If you own a property as a personal property, you will be liable for taxes on any income and capital gains that the property generates. However, when you buy a property as a company, you are able to avoid this personal tax exposure and are able to enjoy
Incur No Transfer Duty
If you VAT register your property investment company, then you will no longer need to pay for transfer duties. Transfer duties are the single largest expense when it comes to the various additional costs associated with transfers of property. For example, let's say you're buying a new addition to your property portfolio. Let's assume the price is an even R2,000,000. If you were buying this property as a natural person, you'd pay around R50,000 in transfer duties. However, if you're buying the property as a company with VAT registration, you will pay nothing.
Author: Paul Wasson
