Reducing costs when buying a house

L_earner

Registered User
Messages
115
Sorry if this has been posted before. I have tried searching the forums for a similar query, and came up with nothing.
I know that the conveyancing costs associated with buying a house are nil when the house is owned by a company, and you simply buy the company from the vendor. I remember the late Liam Lalor being questioned on this point at a tribunal.
But what about stamp duty? Do you get away without paying that as well?
 
Are you asking this from a hypothetical point of view or as a real "can I buy a house through a company" point of view?

If its a real consumerist situation, in general it won't work. Lenders will not lend on this basis.

mf
 
Are you asking this from a hypothetical point of view or as a real "can I buy a house through a company" point of view?

If its a real consumerist situation, in general it won't work. Lenders will not lend on this basis.

mf
Hypothetical for the moment. The question is not as you interpret it. Rather, it involves buying a company and all its assets, one of which is the house. Why would lenders baulk at that?
 
Sorry - let me make that clearer - is this a commercial proposition involving a company ? Or is this a mechanism for purchasing a house without paying stamp duty as a consumer? A lender may well lend funds to a company to purchase property but they are unlikely to lend substantial sums to a consumer for the purposes "only" of buying a property through a company.

Perhaps you are a Denis O'Brien type lurking here in which case I'm sure you've crunched the numbers with your advisors or is it a thought process you're going through as a newbie purchaser? If its the former, I retire gracefully. And the latter, why is everyone not doing that? How many companies own properties held by individual companies that they are willing to sell?

One other thing - its considerably easier to buy a property from an individual rather than buy a company that has a property. The reason being that if you buy the company you need to do a due dligence thingy to make sure you're there are no legal/revenue horrors lurking in the background.
Only asking

mf
 
No this is a genuine discussion about possible ways of buying property. The way prices are, I am looking at a legitimate way of minimising my outlay. My choice of words "get away without paying" stamp duty was ill-advised as it suggests something improper.
I am no Denis O'Brien, just an ordinary joe. There is no change of property ownership involved in the hypothetical deal I am discussing. It is still owned by the company. So what business is it of the lenders? Or of Revenue for that matter?
Of course the due diligence thingy needs to be sorted. But doing that would cost a lot less than going down the stamp duty route.
Why doesn't everybody do it this way? Maybe some people do, but it is only possible if the vendor has transferred the property into a company which he / she is willing to sell.
And lastly, I note you say that it is considerably easier to buy a property from an individual rather than buy a company that has a property. I have never bought a company, but I have already bought or attempted to buy six properties in my lifetime. In each case the experience was stressful to the point where my life was virtually on hold, as I ran between banks, insurance companies, auctioneer, solicitor, engineer, accountant, and tried to put in the occasional appearance at work now and then as well. I have been gazzumped, screwed by a bank, delayed by an auctioneer, and stressed out of my knowledge by the experiences. Twice, the purchase went on for longer than six months, and on each occasion I ended up with no property.
I think I will take my chances trying to buy a property through a company.
 
Think you are missing the point somewhat, Learner. Buying a company in itself involves solicitors, accountants, company secretarial work ( if not undertaken by the solicitors/ accountants) and even possibly auctioneers, since they will *really* be selling a property.

Buying a company is much much more difficult legally and from an accounting perspective than buying a property so you can expect much greater fees. Also there are difficulties with CGT in buying a company in that the purchaser opens themselves to a potential liability and indeed other liabilities too which are normally closed off when you buy a property.

Buying a company rather than a property does not close the possiblility of defective title or being gazumped either. If you are a company owner, you have to file accounts every single year, and others have to be involved depending on the type of company as directors and shareholders. And so on and so on.

This is not a new idea.
 
Ouch. That is something I had not dwelled upon. OK vanilla, my enthusiasm for the idea is somewhat dampened by your post. Thank you.
 
Let me butt in if I may.

There are numerous disadvantages in buying a house (assuming its for your ppr) through a company.

1. Any future gain on the sale of the house by the company if fully taxable - unlike an individual who enjoys the sale of his home tax free (some exceptions).

2.If you are considering buying a company which has a house you will need to evaluate the deferred tax position. That is, say the company has already owned this house for years. Say the company originally purchased this house for €200K (its only asset and no liabilities). The house is now worth say €1m. If you were to buy all the share capital of this company for €1m you would then be stuck with a deferred gain of €800K. Whilst the tax on this deferred gain would only become payable if the company sells the house - should you wish to sell it - it would be highly unlikely the next purchaser would be willing to buy the company share capital without taking the deferred tax position into consideration. In all probability any purchaser of a property for their ppr is likely to want to buy it directly as opposed through shares in a company. The tax free gain from the sale of our home is one of the few remaining tax advantages we enjoy. This advantage does not apply to company held property.

3. Whilst Shares attached Stamp duty of 1% as said above the due diligence on purchase palava can be costly.

4. As said above, you would be required to filed company accounts, corporation tax returns and company house retuns every year.
 
Back
Top