Welcome to the 6th and final (for now at least) part of the Own A Home? series. So far we have covered why this conversation even matters, whether you should buy, build or keep renting, how to get a bank loan approved, working with real estate agents and much more.
 
Here in part 6, we jump into some legal considerations around different ways to structure the deal.
 
Should you own the property in your name or place it as an asset inside a company or other structure?
 
If you buying with a spouse or partner, how do you make sure each person owns the right percentage and protects their interest in the property?
 
***Important Disclaimer***
This is for informational purposes only and should NOT be considered official legal advice. Laws and regulations differ by country and jurisdiction, so be sure to consult a qualified lawyer familiar with how things work in your location.
 

PROS of using a company structure

  1. Estate planning: If passing your property on is important to you, holding it within a company or any other vehicle used succession planning (if structured correctly) could result in huge savings in inheritance tax and legal processes in many jurisdictions.
  2. Asset protection: Using a corporate structure can reduce the level of access to your personal assets. Creditors only have access to the company’s assets, so if the company’s financial situation was to deteriorate, the people behind the company, i.e. directors and shareholders will be safe from creditors. However, note that your lender may insist that you put a personal guarantee behind a mortgage.
  3. Taxes: When a company owns a property and it’s time to sell, there is an option to sell shares of the company rather than the property itself. This can be advantageous to the party responsible for paying the stamp duties or the taxes (depending on the jurisdiction).
  4. Joint tenancy. You and your partner or spouse may own the company in equal percentages each.
 
 

CONS of using a company structure

  1. Costs involved: Besides the costs of setting up a company, there are recurring costs associated with running a company. You may be required to prepare detailed accounts or reports which might involve paying professional fees to accountants and lawyers. That being said, you can minimise and simplify much of this if the company is just a holding company for owning your home.
  2. Grumpy buyer: When it is time to sell, the buyer may not be interested in buying a preowned company, so you will have to sell the actual property and absorb all the maintenance fees you have paid.
 
While this is not an exhaustive list of all the legal considerations, this gives you a firm foundation from doing further research or having an informed conversation with your lawyer. Be sure to check the parts 1 – 5 of this series for more content.

 

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