Renting Commercial Property

My wife and I own a commercial property personally, but our company operates from it. Is there any tax advantage in the company paying us rent?

6th June 2014

Your suggestion has good and bad points to consider. The rent paid is an allowable expense for the company,so this could help to reduce the company’s tax liability. On the other hand, the rent you and your wife receive is taxable as part of your annual tax return. One thing to note, if you continue to own the property personally, is that it may be an advantage to have the property in two names. This way, both spouses’ tax credits can be used.

There is often an advantage to having the premises in your personal names rather than the company when it comes to selling. In this case, if you needed the funds in your own hands, the company would first be liable to Capital Gains Tax on the disposal. There is then the issue of getting the money from the company to you. This will involve some tax being paid; income tax and USC. If you own the premises personally you would be liable to just CGT and the process is simpler.

It may suit some people to have the property in a company however as the rate of corporation tax on rental income is 25% compared to income tax, PRSI and USC which amount to in excess of 50%.

What you choose to do here will depend very much on your business and personal circumstances. You would be advised to seek professional advice before charging the company rent, as the long-term implications on your capital gains tax position could be significant. Your local TaxAssist Accountant would be happy to discuss this with you further.

Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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