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Refinancing personal properties to a company
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Malaysia & Singapore Real Estate Forum Index -> Financing for Properties

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Pai
Milan Doshi

Joined: 12 Aug 2006
Posts: 2691

Posted: Tue Mar 17, 2009 2:20 pm Post subject:

yewkhuay wrote:

interesting topic, is there anywhere to learn from the BASIC? scratch

Ask and u shall receive

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EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Wed Mar 18, 2009 10:13 pm Post subject:

Pai wrote:

theanoon wrote:

If I dispose a property with a profit, does it considered as 'income generating' by the S/B?
Apart from kena taxed by IRB, you can rollover with other new financing with the 150% MOF.

Yes, the income is defo taxable as its a profit..........but I know a way on how you can pay zero taxes study

err, unless trading properties i.e. flipping is proven to be part of the company's biz activities, the profit is capital in nature.

rpgt has been since abolished, so imo, not taxable.

what the auditors / authorities will be looking for is whether there's rental income derived from this property and the track record (historical transaction) of the company in regard to frequency of flipping.. etc. when in doubt, consult yr accountant / company sec.. study

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what gets rewarded, gets repeated..

ryankhoo82
Azizi Ali

Joined: 08 Dec 2007
Posts: 4

Posted: Thu Mar 19, 2009 1:02 am Post subject:

EMYGHT wrote:

ryankhoo82 wrote:

About the existing loans on the property, will the bank be ok if the properties are now transfered to the company? Does the existing mortgage stay or does it have to be refinanced to commercial loans?

not ok.. in any case of altering ownership status / borrowing parties, u are legally bound by the bank. each company is a separate entity regardless of the common owners / shreholders. it's considered a new loan facility, and the financing is assessed based on new credit grounds.. subject to approval.

So I roughly have these steps to go through:

1. Setting up of a private sdn bhd and its associated setup costs and annual costs
2. Transfer of properties from personal name to the company and its associated costs (stamp duties, legal fees)
3. Obtain refinancing (commercial loans since company) since properties will now be under company names. Associated costs would be lower loan margins, higher interest rates, legal fees.

Anything I missed out?

EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Thu Mar 19, 2009 10:08 am Post subject:

ryankhoo82 wrote:

the safer approach to the steps sequence shud be 1, 3 then 2.. why suddenly everyone wanna become property tycoon ah.. salute

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what gets rewarded, gets repeated..

theanoon
Renesial Leong

Joined: 17 Apr 2007
Posts: 337

Posted: Thu Mar 19, 2009 11:41 am Post subject:

EMYGHT wrote:

the safer approach to the steps sequence shud be 1, 3 then 2.. why suddenly everyone wanna become property tycoon ah.. salute

So that all of us can retire by 35 cheers

On another note, what if I dispose my properties to the S/B at a lower price? It will reduce the stamp duties/ legal charges, no? study

EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Thu Mar 19, 2009 11:54 am Post subject:

theanoon wrote:

On another note, what if I dispose my properties to the S/B at a lower price? It will reduce the stamp duties/ legal charges, no? study

2 things can happen to the best of my knowledge :-

1. because it's common party involved here, the disparity in price shud not be too obvious. else, u may likely attract the checking of yr books, this may reveal more than just the price discrepancy, u know what i mean. anw, if it's too low, u can be imposed the stamp-duty charge based on the market value regardless of the s&p price.

2. for financing purposes, it will be based on the lower between market value or s&p price. so, u won't be able to withdraw the max equity upon the 'refinancing'. even if the lender may be able to seek deviation to apply the market value on grounds of common parties, it may fail another policy of minimum 2 years holding for the new entity.

ok, the rest u guys better consult the real pro's..
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what gets rewarded, gets repeated..

Pai
Milan Doshi

Joined: 12 Aug 2006
Posts: 2691

Posted: Thu Mar 19, 2009 2:00 pm Post subject:

EMYGHT wrote:

so profit made from flipping a compaby owned property is tax free? scratch

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Nothing in this life that is worth goin' for, comes easy.

EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Thu Mar 19, 2009 3:21 pm Post subject:

Pai wrote:

so profit made from flipping a compaby owned property is tax free? scratch

well, i think need to distinguish between income and capital gains.. and imo, the interpretation depends on how the activities are being carried out in a company i.e. investment holding.

say, if can establish that a company is flipping property more frequently than in general, then the profit is deem as operating income and will be taxed appropriately. whereas, if the property has been generating rental and subsequently disposed off, think it's under the purview of rpgt, means capital gains being waived.. this is from my understanding.
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what gets rewarded, gets repeated..

ryankhoo82
Azizi Ali

Joined: 08 Dec 2007
Posts: 4

Posted: Fri Mar 20, 2009 8:30 pm Post subject:

EMYGHT wrote:

theanoon wrote:

On another note, what if I dispose my properties to the S/B at a lower price? It will reduce the stamp duties/ legal charges, no? study

Hey. Does that mean if I transfer from my personal name to the company at a higher price, and obtain financing for the transfer, I technically can get money (withdraw equity) due to the higher transfer price?

Example, remaining loan amount is 250k, I transfer the property to company at 330k (assuming this is market price) and obtain financing from bank of 300k. I take the 300k to pay off the individual loan 250k, pocket 50k and get the property transfered to the company. The downside is I pay higher stamp duties.

Will the common party issue cause any problems to do this? haha

Pai
Milan Doshi

Joined: 12 Aug 2006
Posts: 2691

Posted: Mon Mar 23, 2009 5:07 pm Post subject:

ryankhoo82 wrote:

Does that mean if I transfer from my personal name to the company at a higher price, and obtain financing for the transfer, I technically can get money (withdraw equity) due to the higher transfer price?

This is what I meant by having your cake and being able to eat it too cheers

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ganurianz
Azizi Ali

Joined: 31 Oct 2008
Posts: 134

Posted: Mon Mar 30, 2009 5:04 pm Post subject:

If it's a newly setup co, it would be very VERY difficult to get bank loan. Current account must active at least 1 or 2 years, with good cash flow.

alvinccw
Azizi Ali

Joined: 23 Jul 2007
Posts: 27
Location: Damansara

Posted: Tue Mar 23, 2010 1:41 pm Post subject:

ganurianz wrote:

If it's a newly setup co, it would be very VERY difficult to get bank loan. Current account must active at least 1 or 2 years, with good cash flow.

Checked with publib bank, not interested to lend.
Then UOB, a "NO" if shareholders not related.
Then Ambank, 1st year need directors` guarantee, highest margin 70%, the 2nd yr "maybe" 75%. AND better buy the second house 6 months after the first one (need time gap-> to prove credibility?)
Is this mean that a much lower COCR?

EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Wed Mar 24, 2010 12:57 pm Post subject:

none of the above carries as much weight as having income to support the loan itself and the repayment history, as far as the credibility of a borrower is concerned. the credit scoring systems of respective lenders probably incorporate 1 or more of the above just as a kyc, relationship sort of thingy, very subjective measurement.. _________________ what gets rewarded, gets repeated..

alvinccw
Azizi Ali

Joined: 23 Jul 2007
Posts: 27
Location: Damansara

Posted: Thu Mar 25, 2010 11:32 am Post subject:

EMYGHT wrote:

none of the above carries as much weight as having income to support the loan itself and the repayment history,

do you mean rental income? so izzit better to buy properties comes with tenancy?

EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Fri Mar 26, 2010 3:47 pm Post subject:

alvinccw wrote:

EMYGHT wrote:

none of the above carries as much weight as having income to support the loan itself and the repayment history,

do you mean rental income? so izzit better to buy properties comes with tenancy?

i mean income fr yr primary source. and of coz, it's easier to qualify with rental esp if yr existing income is under substantiated.
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what gets rewarded, gets repeated..

stevesee
Azizi Ali

Joined: 13 Apr 2010
Posts: 3
Location: KL, damasara & malaysia.

Posted: Tue Apr 13, 2010 9:10 am Post subject:

Pai wrote:

theanoon wrote:

Need to buy you lunch for that trick toothy10

im the one learning here boss study

btw guys, can a director buy assets belonged to his/her own company for their private usage ?

Hi there,

Yes you can. As long as the director/member of the board agree to it, this is an issue of your own company, where you need to discuss with your fellow director.

Please take note, if you declare you purchasing for investment to the bank, the bank will slash your borrowing margin from 80%, to 75%, to 70%. base on how many property your company own.

Above mention are under commercial category.

Have fun and have a good day.

Regards
Steve See
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Steve See
016 6100891
Mortgage Consultant
Mortgage Broker Sdn Bhd

stevesee
Azizi Ali

Joined: 13 Apr 2010
Posts: 3
Location: KL, damasara & malaysia.

Posted: Tue Apr 13, 2010 9:14 am Post subject:

alvinccw wrote:

ganurianz wrote:

If it's a newly setup co, it would be very VERY difficult to get bank loan. Current account must active at least 1 or 2 years, with good cash flow.

hi,

Just give director IC, 50% to 60% margin can be approve. some bank are doing it. If you have a good track record of 1 year, terms can be discuss.

Regards
Steve
_________________
Steve See
016 6100891
Mortgage Consultant
Mortgage Broker Sdn Bhd

SPB
Azizi Ali

Joined: 12 Jun 2010
Posts: 8

Posted: Sat Jun 12, 2010 11:29 pm Post subject:

Would like to find out whther lawyer's loan agreement is a standard format given by the bank? Is there something I need to look out for? Tks.

EMYGHT
Renesial Leong

Joined: 17 Apr 2007
Posts: 1782
Location: KL

Posted: Sun Jun 13, 2010 3:41 pm Post subject:

SPB wrote:

Would like to find out whther lawyer's loan agreement is a standard format given by the bank? Is there something I need to look out for? Tks.

to the extent that the lawyers need to 'purchase' the loan agreement from the bank.. what do you think?

ikttan
Renesial Leong

Joined: 02 Jun 2010
Posts: 415

Posted: Wed Jul 07, 2010 10:48 pm Post subject:

cblau wrote:

I think if want to save some taxes another way of doing would be to lease all his units to his sdn. bhd. and than the sdn. bhd. would lease to the tenants. But than tax bracket must be higher than 20% to make this worthwhile.

This is an interesting topic to me. Ok, will the following scenario work?

(1) Form a Sdn Bhd as a property management company, i.e. don't own the property but manage it on behalf.

(2) The properties it manages belongs to the 2 directors of the company.

(3) One of the director becomes employed by the Sdn Bhd with a salary to do the following; (1) work with agents (as director nor company is a registered agent) to let out the units, (2) collect rentals, (3) pay maintenance and service charges, (4) pay quit rent and assessment, (5) handle maintenance/repairs of units.

(4) Allowances for the working director for transportation (to run around) and phone calls.

(4) At the end of each financial year, dividends can be paid out to the "owners" of the properties if there are any surplus.

In summary, the owners let the Sdn Bhd manage the properties for no returns. If there are surplus, then they get something.

Can ar? No need legal fees, stamp duty, refinancing and so on.

mike1970
Azizi Ali

Joined: 01 Dec 2009
Posts: 85

Posted: Thu Jul 08, 2010 10:12 am Post subject:

The rentals still go to the owners. Where is the company income to pay all the expenses?

ikttan
Renesial Leong

Joined: 02 Jun 2010
Posts: 415

Posted: Thu Jul 08, 2010 10:14 am Post subject:

Rentals go to Sdn Bhd to pay for the services it offers.

cblau
Superman Li Ka Shing

Joined: 19 Aug 2006
Posts: 20931

Posted: Thu Jul 08, 2010 10:21 am Post subject:

ikttan wrote:

cblau wrote:

If no legal fees means there is no tenancy agreement kar ? scratch

Also in order to pay dividend from the surplus you still have to pay tax on the surplus first before dividend can be paid out.

ikttan
Renesial Leong

Joined: 02 Jun 2010
Posts: 415

Posted: Thu Jul 08, 2010 10:55 am Post subject:

cblau wrote:

ikttan wrote:

cblau wrote:

If no legal fees means there is no tenancy agreement kar ? scratch

Also in order to pay dividend from the surplus you still have to pay tax on the surplus first before dividend can be paid out.

The above is not "refinancing" but "outsourcing the property management". Legal fees for tenancy agreement with tenant is part of the services provided by the company. Basically, you spend on Sdn Bhd maintenance, maybe 3-5k a year and you save through claims on transportation, salary, EPF contribution and so on. It works out to be probably slightly better savings but more work to manage the Sdn Bhd. But dunno if this arrangement of outsourcing own property to own company is a doable thing or not ...

jenny.smith
Azizi Ali

Joined: 29 Jul 2010
Posts: 5

Posted: Thu Jul 29, 2010 6:43 pm Post subject:

To change the status of ownership of parts of loans, or is legally required by the bank. each firm is a separate entity, regardless of the joint owners / shreholders. is considered a new facility and funding is determined on the basis of new loans. _________________ Chesterfield Virginia real estate for sale

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