Posted by
TMG
18 yrs ago
My company uses my rental allowance as a tax deduction so if I want to take the money as income and use to buy a house, I need to pay them the tax loss. This is substantial money. One option is to start a shell company and buy the flat and have the company pay my shell company. They agree to do this but does anyone have any idea if this is legal and how to do it? Appreciate any input and guidance
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Ed
18 yrs ago
I think this is quite common - if your employer has no problem with this arrangement then I dont think there are any legal issues.
If you need help with a shell company try Keith Chu:
2543 7538
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TMG
18 yrs ago
Thanks. Is Keith part of a firm, individual tax consultant?
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TMG
18 yrs ago
Thanks. Is Keith a tax accountant or personal advisor of some sort?
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TMG
18 yrs ago
The issue I have is probably like many other expats. I have lived in HK for many years and contining having my company pay a fortune in rent and I just keep wondering if "what if" I used the money to actually pay off a mortage.
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What they pay to you should be deductible. The issue is whether additional salaries tax is payable.
The issue asssumes interest on mortgage is lower than rent, but you could be worse off by buying.
Haven't thought it through fully, but if you buy a comparable investment property would you not be in the same position that you want to be in? Assume related to 95% mortgage, but is that possible if you buy through a company? Not sure that "always better" to buy through a company....
Agree with hoyo that general view of employers is to not encourage purchase of properties by mobile employees. SARS had properties 70% below cost, if that doesn't make reluctant sellers not sure what it would take.
Plus if you get housing, assumes you are considered "not local". That's why I wouldn't make too much noise, raising such issues with HR suggests you are "local" at heart.....you could setting yourself up as the perfect candidate to be localised.....
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