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> Renting to my own company, Question for lawyers!

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TSgeorgeloke P
post Nov 26 2022, 10:38 PM, updated 2y ago

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So I bought an office unit, and am planning to rent it back to the company I own (I am the sole director). Spoke to my accountant and she said as long as the rental is market rate then everything’s good. Got the tenancy agreement done and stamped… kinda weird though because both signatories were mine.

My question is–I am planning to renovate the place, and so the cost will be company expenses, right? Are there any guidelines about this, i.e. how much is deemed excessive, etc? Any other watchouts to look out for? I understand that these kind of self-dealing arrangements can get extra attention from LHDN, and I want to do everything by the book.

Thank you!
wufei
post Nov 26 2022, 10:40 PM

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i thought this is a question for tax agent instead of lawyer
TSgeorgeloke P
post Nov 26 2022, 10:52 PM

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QUOTE(georgeloke @ Nov 26 2022, 10:38 PM)
So I bought an office unit, and am planning to rent it back to the company I own (I am the sole director). Spoke to my accountant and she said as long as the rental is market rate then everything’s good. Got the tenancy agreement done and stamped… kinda weird though because both signatories were mine.

My question is–I am planning to renovate the place, and so the cost will be company expenses, right? Are there any guidelines about this, i.e. how much is deemed excessive, etc? Any other watchouts to look out for? I understand that these kind of self-dealing arrangements can get extra attention from LHDN, and I want to do everything by the book.

Thank you!
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Sorry if I posted this wrongly. Newbie here. Where should I post instead?
metalfire
post Nov 26 2022, 11:01 PM

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this question your tax agent should be able to answer.
sadukarzz
post Nov 26 2022, 11:09 PM

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parking because i am interested too
k town shit
post Nov 26 2022, 11:12 PM

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QUOTE(sadukarzz @ Nov 26 2022, 10:09 PM)
parking because i am interested too
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Me too, follow
Femsroot
post Nov 26 2022, 11:31 PM

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Renovation can claim? Maintenance can claim.
mini orchard
post Nov 27 2022, 06:29 AM

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QUOTE(georgeloke @ Nov 26 2022, 10:38 PM)
So I bought an office unit, and am planning to rent it back to the company I own (I am the sole director). Spoke to my accountant and she said as long as the rental is market rate then everything’s good. Got the tenancy agreement done and stamped… kinda weird though because both signatories were mine.

My question is–I am planning to renovate the place, and so the cost will be company expenses, right? Are there any guidelines about this, i.e. how much is deemed excessive, etc? Any other watchouts to look out for? I understand that these kind of self-dealing arrangements can get extra attention from LHDN, and I want to do everything by the book.

Thank you!
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Generally, if the property belongs to the company, major renovations on improvement of a property is treated as 'assets' and is claimed under 'depreciation'.

If is individually owned, the company cant claim.

As a tenant, any upkeep expenses for rental property is claimable against revenue or if the landlord pays for it, then is claimable when declaring for personal rental income tax.

LHDN will know whether a person or co is evading tax payment. The general rule of thumb .... expenses as a % of income or revenue.

This post has been edited by mini orchard: Nov 27 2022, 06:46 AM
TSgeorgeloke P
post Nov 27 2022, 07:22 AM

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QUOTE(mini orchard @ Nov 27 2022, 06:29 AM)
If is individually owned, the company cant claim.
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Thank you.

Yes, the property is owned by an individual. However, it has been rented out to a company to be used to run its business. The renovation is therefore done by the company, and thus recorded as a business expense in the company’s books.

Is this a legitimate reason or explanation?

The tricky thing is the company is owned by the individual. I guess if it is not, then there’s no question at all.
mini orchard
post Nov 27 2022, 07:47 AM

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QUOTE(georgeloke @ Nov 27 2022, 07:22 AM)
Thank you.

Yes, the property is owned by an individual. However, it has been rented out to a company to be used to run its business. The renovation is therefore done by the company, and thus recorded as a business expense in the company’s books.

Is this a legitimate reason or explanation?

The tricky thing is the company is owned by the individual. I guess if it is not, then there’s no question at all.
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Is the amount that is claim matters. Renovation can be a big or small amount.

For eg, if is just painting, I would say is not an issue. Just date the bill later.

Just giving an eg ... a landlord that engage an agent to let out for 1st time is not allow to claim agency fees for initial expenses.

Generally, pre operating expenses are not claimable as no business revenue is generated.

This post has been edited by mini orchard: Nov 27 2022, 07:55 AM

 

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