Using of Limited Company to Own Property

• Using of Limited Company to Own Property

• Interest on loans used to finance the purchase of property is not deductible under property tax. An individual can only deduct mortgage interest if he has elected for personal assessment.

• A way to claim mortgage interest deductions and yet avoid electing personal assessment is to let a company own the property. The rental income is chargeable under profits tax but the interest is deductible provided that the certain conditions are fulfilled

• Management Fees Paid by Tenant

• Assessable value not only includes rental income but all the considerations, e.g. lump-sum premium, rental for furnitures, etc. But actual management expenses or repairs and outgoings are not deductible under property tax. If it is stated in the leasing agreement that alll the rates, repairs and management fees are paid by the tenant, the assessable value can be reduced.