Buying through an SL

This topic contains 6 replies, has 3 voices, and was last updated by Profile photo of Anonymous1 Anonymous1 5 days, 15 hours ago.

  • Author
    Posts
  • #198862
    Profile photo of Anonymous1
    Anonymous1
    Participant

    According to several sources it seems that if you buy property using an SL the tax rate is about 3% instead of about 12.5% if you buy personally.  Is that true?  It does mention however, that you need to sell the property you buy through the SL with the 3% tax within 5 years or else you need to pay the difference to match the 12.5%.

    This sounds too good to be true. I know there are some contingencies such as that you need a minimum cash amount on your business account, have an ‘administrator,’ pay different taxes (with official auditor report), etc.

    It would be great to learn more from you in case you have more information around this topic.

  • #198911
    Profile photo of strudelbaum
    strudelbaum
    Participant

    The usual transfer tax is 8% but when you buy for an SL  the rate is 2%. This is, however, not meant to apply to your own residence but rather to rentals. The SL has to be a specifically real estate investment company. Talk to a lawyer before you jump into this.

  • #198912
    Profile photo of Anonymous1
    Anonymous1
    Participant

    Great. Thanks for the reply. That is much appreciated. I definitely will talk to a lawyer on this. Moreover, I heard that you need to sell the apartment you bought at 2% within 5 years. If you have any other tips/thoughts then please do share. Thanks.

  • #198913
    Profile photo of strudelbaum
    strudelbaum
    Participant

    As far as I understand (please check this) you don’t have to sell unless you have proof of rental for the period. Of course, this would apply to long-term owners only.

    If you’re into making a quick profit on a fixer-upper project or the like they’d tax you accordingly for it. So if you’re buying cheap make sure they accept all the money is above the board.

    Good luck!

  • #198915
    Profile photo of SurveySpain
    SurveySpain
    Participant

    Even if you don’t rent it out, you can be taxed on the notional income that you would have gained. Same for the car ling in the garage. Its a rental company and so the tax man assumed that’s what’s happening.

  • #198920
    Profile photo of strudelbaum
    strudelbaum
    Participant

    I think the original question was about the funds transfer tax. Taxation of your rental income is another thing. So whatever you do the taxman will have his share. You do save a lot of money, though, by operating with a real estate investment company. Long-term planning is essential here.

  • #198923
    Profile photo of Anonymous1
    Anonymous1
    Participant

    Thank you all. If anyone has additional thoughts/knowledge on this topic then please do share.

You must be logged in to reply to this topic.