Dear sifus sekalian,

My friend and his siblings have just acquired a piece of land and the land title is under their personal name. My friend also owns a company operating child care centre. He is willing to let his Company pay for the cost of the land (deposit+term loan installments) provided that his siblings bestow upon him the right to use the property and build a childcare centre.

My question is,can the payments by Company can be capitalised in their books? is there any deemed RPGT or tax issues? If cannot capitalise, Company can expense off and the benefit from the payment is capital gain on my friend's part and thus, is non taxable gain?



This post has been edited by piggy2008: Jul 24 2020, 09:38 PM

Bank wont give out mortgage if your company dont own it.

I mean the term loan is under their personal name but the Company will pay for the installments.

rent it out to the company make more sense

But then they will have to declare rental income in their personal tax which they did not get.

Double posted.

This post has been edited by edyek: Jul 24 2020, 11:43 PM

For example :

Joint Venture method:

1) A B C (landowners) purchase the land together.

2) Childcare comapany fork out money for deposit (land deposit). Childcare company can treat the deposit or commitment for the JV with Landowners. But technically the cash is paid as deposit for the land. Left pocket to right pocket method. In the books of the company, the deposit will be treat as a JV deal deposit.

3) In order for the child care to build a centre at the land, the consideration towards the JV is to pay off any loan installments on the land.

4) For landowner, what they gain from this JV is, they owned the land when the loan is paid off and/or they can "enjoy" certain profits from the child centre at the end of the year. So just in case the child care need to offset some "expenses" yearly, it can be done through "profit sharing" with the land owner through the JV deal. Again right pocket to left pocket method.

Ok, I cincai say only. Like I say, you better consult lawyer and accountant. Dont quote me on this if shit hits the fan.

This post has been edited by edyek: Jul 24 2020, 11:43 PM

Why would your friend pay for EVERYTHING and INCLUDE his siblings as co-owner ?????????????? ...... he can purchase the property using his OWN name.

What is their logic in the purchase ??????????.

Why would a PAYING OWNER required to asked for permission from NON-PAYING OWNERS to use the property ..... is like saying major asking minor shareholder how to run the company !








To answer your questions ...

1. If the property is not bought using company's name, he cant capitalised it, i.e. treat it as a fixed asset. Is a PERSONAL purchase.

2. The purchased deposit can be treat as rental deposit by the company.

3. The monthly installment payment by the company can be treated as rental paid for using the land and building in P&L.

4. Nett rental 'received' by the join siblings are divided equally after deducting loan interest and related expenses for yearly income tax declaration.

5. Expenses for upkeep of building can be treated as Company's expense in P&L, OR ......as deductions from gross rental received in income tax declaration.

6. RPGT is only applicable when the property is sold.

This post has been edited by mini orchard: Jul 25 2020, 07:10 AM

You cant have the best of everything.

A , a company, rents a property from B who is also a owner of A

A benefit is rental expense in P & L, less tax payment.

B benefit is rental collection, no need pay tax ? Govt bankrupt !

Whether actual money received is not important. All can be done using Accounting Journal Entry in the company to show 'payment' made.

Alternatively, the company issue a monthly 'rental' cheque to owner of childcare and he uses it to pay the bank.




When a customer made payment for a purchase, it become an income/sales for the seller. Customer claim for tax deduction, the seller pay tax.

This post has been edited by mini orchard: Jul 25 2020, 07:16 AM