Buying property using a company

[lukemaster130]

hi, would like to check if buying property using a company can be used as an expense?

in the simplest terms, if i forecast my net profit of 200k for FY23 (prior to purchasing the property) and I then bought a property for 200k in FY23, will my PnL / balance sheet be 0 hence i pay 0 tax in 2024?

thanks

 

[nc6041]

@lukemaster130 My friend. Seems like u need the help of a tax agent

 

[lukemaster130]

@nc6041 I think I do

 

[lakes]

@lukemaster130 Use an SPV and buy the property then lease the property to your company, then your company can treat it as expense.

 

[enduring_until_the_end]

@lakes This dude man. Must be a good accountant

 

[lakes]

@enduring_until_the_end Cherry on top is the company enters into a long term lease of 200k with the SPV

 

[lukemaster130]

@lakes Thanks for your comment! But then you’ll be paying taxes on your spv too right? Unless it’s a loss making spv

 

[mlorrainee]

@lukemaster130 I believe the property will be your company asset and not expenses. In other words, your earning is still there but in the form of bricks and metals.

The legal fees and other expenses when purchasing the properties on the other hand can be deducted.

 

[lukemaster130]

@mlorrainee

believe the property will be your company asset and not expenses. In other words, your earning is still there but in the form of bricks and metals.The legal fees and other expenses when purchasing the properties on the other hand can be deducted.

oh then why are cars tax deductible yet (although up to 100k or 150k) right? will cars be parked under assets / expenses?

 

[lynnie7]

@lukemaster130 If you're making 200k in revenue. You are better off talking to a Actual accountant that deal with tax. It's clear you don't have a firm understanding of assets, liabilities, revenue, expense. Since you think buying a house is somehow a expense that can offset revenue.

 

[lukemaster130]

@lynnie7 Thanks for your honesty. are cars considered an asset? Because it can be under expenses up to 100k right? Just thinking along the lines if property can be considered like that too

 

[nataliemoralesa]

@lukemaster130 Car are considered as an asset and cannot be classified as expense in your profit and loss account. It will show up as non current asset in your statement of financial position.

The only thing that can be classified as expenses in the profit and loss account are the hire purchase interest that is incurred to buy the car.

But you can claim capital allowance on it in tax computation eg 50k if the car is above 150k. But please note that depends on the audit firm, they may disqualify this cost from claiming capital allowance if the car is for personal use for the director of the company.

Also please seek consultation with a firm.

Edit : capital allowance is claimed over 4 years at 40% at the first year and 20% subsequent years

 

[lukemaster130]

@nataliemoralesa I see, thanks kind stranger for your thorough explanation

 

[pablob]

@nataliemoralesa Dude you giving away financial advice for free here.. dont spoil market!

 

[eliza188]

@mlorrainee The property is an asset, but if OP financed the property with a loan.

Then that loan is an expense/liability, you need to deduct this from your revenue to find the profit you are taxable on.

 

[smheelen]

@eliza188 Not an accountant, but pretty sure you'll only be allowed to deduct the interest expense tops and not the entire loan amount

 

[ineedadvice101]

@lukemaster130 Buying assets doesn't count as loss lol. Doesn't matter if using company/personal.

If got such a loophole why would anyone be paying tax?

 

[lukemaster130]

@ineedadvice101

oh then why are cars tax deductible yet (although up to 100k or 150k) right? will cars be parked under assets / expenses?

what about cars? sorry i'm a total newbie when it comes to this, just thinking to find ways to reduce tax exposures

 

[ineedadvice101]

@lukemaster130 https://ringgitplus.com/en/blog/inc...-income-tax-relief-malaysia-2023-ya-2022.html

I don't think buy car can claim as tax deductible. Look at the list, everything in there.

 

[lukemaster130]

@ineedadvice101 Saw this too but I think above link is for personal tax deductions. Am interested in a Sdn Bhd tax deductibles / expenses