News Hong Kong Property & Finance

Property Investment using Shell / Holding company versus personal name

ORIGINAL POST
Posted by shirls 12 yrs ago
Hi, anyone know why so many people are setting up holding / shell companies to invest in the property market versus just using their personal names? The only reason i can think of is that you can deduct expenses from the rental income. But then wouldn't you need to pay coporate profit tax on the gains resulting from the sale of the property as well? Pls help! this is so confusing!

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COMMENTS
Topol 12 yrs ago
I think it also avoids stamp duty. When the property is sold the new owner buys the shares in the shell company which holds the property. A sale of a company means a tax charge of 0.2% as opposed to 3.75% stamp duty.

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traineeinvestor 12 yrs ago
@Topol - yes it does but very few people will be willing to buy company because (i) the risk of inheriting undisclosed liabilities and (ii) the risk that the tax authorities will deem the company to be a trader and tax any gain on disposal of the property by the company (from the company's original purchase price). It's not a given that gains on disposal of a property by a company would be taxed, but the possibility is there.


@shirls - you are correct.

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shirls 12 yrs ago
Thanks guys!

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