Buying property using a company

[warriorforchrist]

@lukemaster130 You need both a tax agent and accountant. The good news is, the salary and fees paid to them will be deductible.

 

[inneedofacompass]

@lukemaster130 Assuming u take a loan, it will be recognised as liability on your balance sheet. The only impact it will have on your income statement is the monthly loan repayments and depreciation (expense). The property is also capitalised as land & building in your balance sheet and building will be depreciated, land no depreciation as indefinite useful life.

smaller misc. expenses (renovation/furnishing) that doesn't meet capitalisation criteria will be expensed off to the P&L.

But renovate/buy furnishing can claim capital allowance.

 

[lukemaster130]

@inneedofacompass i see. thanks for your explanation

 

[blessedjoanna]

@lukemaster130 I'm not an accountant so I'm happy to stand corrected if one does jump in, but the simple answer is that you can't count the full purchase price as part of your expenses for this year, but in theory you can over time.

When you buy a company car, typically this will be categorised as an asset (something your company owns which has value). The cost of an asset is not recognised upfront, but recognised throughout its useful life (depreciation). For arguments sake let's say your car was RM100k, with a useful life of 5 years and we apply straight line depreciation. That means only RM100k divided by 5 i.e. RM20k can be counted towards your expenses this year. Then next year, another rm20k can be counted etc until the car is fully depreciated, i.e. zero value at year 5.

 

[aian]

@blessedjoanna At which point, you sell the car to yourself at RM1.

 

[lukemaster130]

@blessedjoanna thanks i understand better now

 

[hippyhappo]

@lukemaster130 Sorry I LoL-ed so hard from this because I was the same many many years ago when I First started.... but seriously, no, buying a property is not an "expense". It's still profit just that in the Balance Sheet it'll be shown as a fixed asset (building) instead of a current asset (cash).

 

[lukemaster130]

@hippyhappo learning as we go along in life hehe

 

[timandres]

@lukemaster130 Property no.

Loan interest buying a property yes.

Property renovation yes.

 

[lukemaster130]

@timandres tq

 

[dancing7]

@lukemaster130 When you buy property under company via company profit.

1. Property cannot deduct as expenses.
2. Loan interest incurred from the said property can be deducted but only if the property generating income. Profit from property is actually treated as other income.

Pretty much no2 answers your question.

(Not your adviser but better get advice from your tax agent)

 

[lukemaster130]

@dancing7 thanks