Putting the house in my own name

[Conchman]

I have decided to transfer my house from my company name to my personal name, can somebody correct me if I made a mistake in my calculations?

1) Under company name
I pay RD$30,000 yearly declaration (1% on capital), RD10,000 ext audit, plus RD$4,550 commercial register fee. total RD44,550 per year

2) Under my personal name
I pay zero, no real estate tax since its valued under 5,000,000.

no transfer fees from company to personal name? So I was told. Anybody know anything different?

Guess there is some risk someone getting hold my house say common law wife/divorce etc or someone who sues me? but they would probably get hold of those assets even if they are in a company name, would be my guess.

[Big Dan]

Perhaps the difference is in how the liability follows you if you are sued. Example, if the company is sued the assets of the company, once depleted, are gone.

If you are sued you are able to continue generating income, so the liability can follow you.

[Conchman]

Just found out from my lawyer that my proposed transfer would be a big mistake, since the property tax valuation department would be assessing the property/house at about 80-90% of the real value which is much higher than the current capitalization of the company. This would effectively cost me many times over in property taxes compared to what I would save in company fees. In addition, there would be a 3% transfer tax on the value over RD$5M. So I will keep the house in the company for the time being.

Apparently there will be re-evaluation of all property taxes.

[SosuaJoe]

Conchman demonstrating the best way to make use of a lawyer -- BEFORE making a decision.

So many people seek out legal counsel once the decision is made, generally once it;s too late to avoid an issue and time to try to resolve an issue.

Conchman's way is cheaper and leads to fewer ulcers. Take note.

[PBJ27]

We are buying a condo and have paid all legal fees and now they tell us tht we must pay a for a Shelf Corporation for US $2600.00 plus a transfer fee of $1450.00 (which was never disclosed before). The price we paid was $285,000 US. Now we are totally confused as people tell us the shelf corporation for RD 1 million should not be more than about $1100.00US. I have contacted another attorney and am waiting for a response. Has anyone else had this issue? If so how was it resolved.

[drcaycu]

I would like to know if there is at all any advantage to having a property under 5mm in the name of a company taking into account the 1% tax on assets. Maybe if you run it as a business renting it out and your income tax of 25% amounts to more than the 1%. Does anybody know?

[Castellamonte]

Originally Posted by PBJ27

We are buying a condo and have paid all legal fees and now they tell us tht we must pay a for a Shelf Corporation for US $2600.00 plus a transfer fee of $1450.00 (which was never disclosed before). The price we paid was $285,000 US. Now we are totally confused as people tell us the shelf corporation for RD 1 million should not be more than about $1100.00US. I have contacted another attorney and am waiting for a response. Has anyone else had this issue? If so how was it resolved.

It is definitely possible to get a company created for less than USD $2600. However, the formation of the company including the capitalization of it is pretty important to you. For example, if your company has a capitalization of RD$50,000 and it contains an asset of USD $285,000 it could raise some eyebrows at the tax department.

In my opinion, you should have the company reasonably capitalized to a level such s RD$500,000 for such a purchase. Obviously this is still below the real value but it isn't so far below as to cause it to be shown in a bad light to the tax authorities.

The cost of the "transfer" may be the real estate transfer tax. There is a tax when Person 1 sells a property to Person 2. This is charged as a % of the transaction and the level you are being charged seems to fit given the purchase price.

The way this real estate transfer tax is avoided in the future is if Person 2, upon purchasing the property, places the property into Company A. Then, when the property is due to be sold again you sell the shares of Company A. Since no real estate was transferred (Company A still owns the real estate), there are no taxes.

But never have a property in a company purely for that reason. It's only useful to the next buyer in the line (not you). But I would recommend all property be in a company for a couple of reasons; a) liability and b) inheritance. The former is obvious but the latter sometimes people forget.

If the property is owned by a company and the company has among the shareholders the spouse or family of the individual owning the property then upon death there is less of an issue as to who controls the property. Otherwise you better have a registered will in this country or the default Dominican inheritance laws will take over (what a nightmare).

...hope this helps!