Real Estate: Buying in Your Own Name or Through a Company?

Buying in Your Own Name : The Traditional Route

Advantages

1. Simplicity: Ideal for a first-time purchase, buying in your own name is straightforward, with no complex legal or accounting structures involved.

2. Tax Benefits: Capital gains are exempt after five years (excluding speculative resale). Rental income is taxed based on the cadastral value, not on actual rental income. Some expenses, such as mortgage interest, may be partially deductible.

3. Flexibility of Use: This option is particularly well-suited if the property is intended for personal use or mixed use (private/professional).

Disadvantages

1. High Inheritance Taxes: In the event of death, transferring the property to heirs can lead to significant taxation.

2. Limited Borrowing Capacity: The investment is personal, meaning the buyer must shoulder the debt alone. This requires solid financial standing and may limit future flexibility.

Buying Through a Company : The Strategic Route

Advantages

1. Tax Optimisation: Expenses such as registration duties, notary fees, maintenance, depreciation, and loan interest are largely deductible, reducing the company’s taxable base.

2. Use of Surplus Funds: Companies can reinvest surplus liquidity into real estate, potentially yielding better returns than idle cash.

3. Easier Transfer of Ownership: Transferring company shares is generally easier to structure and can offer more favourable inheritance planning options.

Disadvantages

1. Administrative Complexity: Purchasing through a company requires diligent management accounting, legal obligations, shareholder meetings, and more.

2. Capital Gains Taxation: Any gains from the resale of the property are taxed at the corporate level. Additionally, distributing these profits to shareholders is subject to dividend withholding tax.

3. Benefit in Kind: If the property is made available to a company director or employee, it may generate a taxable benefit in kind.

The right choice depends on your profile

There is no one-size-fits-all solution. Choosing between purchasing in your own name or through a company depends on several key factors: your wealth planning goals, current tax situation, investment horizon, and succession or inheritance protection needs.

For a second home or a first personal investment, buying in your own name is generally the preferred route. However, for more complex operations, recurring projects, or a substantial real estate portfolio, buying through a company may prove more advantageous.

At Engel & Völkers, we believe that a good investment is, above all, a well-thought-out one.

Our agents are here to assess your needs, provide expert guidance, and support you in implementing the strategy best suited to your objectives.

Make informed choices. Invest smart.