Co. owns leasehold property and main shareholder owns freehold.

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Clonback

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A company owns a commercial property with a 250 year lease and a director with a 99% shareholding owns the freehold.The rent is 50 euro p.a.
If the property is sold is there much value attributed to the freehold interest?
 
How long is left in the lease. What are the terms of the lease, rent reviews, break clauses etc.

How did the company come by a 250 year lease?
 
This is a retail unit with c.200 years left.Its a standard long lease with no rent reviews and no breaks.The property was acquired 25 years ago.There are plenty of commercial properties held under these types of long leases in Dublin.What is unusual is the fact that the main shareholder acquired the freehold a number of years ago.
Appreciate any views
 
The value of the freehold reversion on a 200 year lease is negligible - how much would you pay for it?!
 
A very interesting question.

I presume that the leasehold interest is what is very valuable. He has a right to occupy that property for 200 years at €50 per year. That is the equivalent of a freehold.

I would have thought that the freehold itself was not worth very much.

Has the tenant a right to buy out the freehold? I appreciate that the tenant company is owned by the landlord.
If the property is sold is there much value attributed to the freehold interest?
Click to expand...

Who is selling what?

The landlord would be selling the right to receive €50 a year for 200 years.

The tenant wold be selling the right to occupy a property for 200 years at €50 a year.
 
The company is preparing to sell the lease and the landlord is also interested in selling the freehold.

Obviously the amount attributed to the landlord won't be hit by double taxation whereas extracting money from a co. will.
 
I'd imagine that the freehold is of minimal value on its own.

Can the tenant ie the company surrender the lease to the landlord? Would market value apply as they are connected!

I'd imagine that the lease is worth 99.9% of the value of the property but the company would have a base cost. Has the value increased significantly since purchase hence the double charge to CGT?
 
Joe

Yes they are connected parties so surrendering the lease could be done but what financial benefit would be achieved?

There is a substantial increase in value and with no indexation it generates a hefty CGT bill.

Developing a property normally requires landlord consent.Is there any value there?

Appreciate your views.
 
It's good to look for ideas or a second opinion on askboutmoney, but this is such a technical area, that you really should pay for good tax advice well in advance of selling it.
 
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