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Setting up a company for the custody of real estate

Establishing an offshore company for the holding of real estate, regardless of which country the property is located in, has become a common occurrence. Acting as an overseas property holding company, the offshore registered entity enables the beneficial owner(s) to enjoy an improved tax-regime and reduce many of the costs associated with investing in property abroad.

If real estate is owned by an International Business Company (IBC), such as in the British Virgin Islands, the Seychelles, or Belize, and said property is used to generate a rental income — depending on the country where the property is located — the offshore company may be able to reduce the effective level of any withholding taxes on the income through the correct structuring of financing. With regard to capital gains, in the case of the sale of the property, once the real estate is owned by an offshore holding company, this type of income may not be subject to taxation or may face reduced taxation depending on the onshore jurisdiction where the property is located.

Moreover, selling a property owned by an offshore company is more efficient and can occur more rapidly than when owned by an individual, as the sale would simply entail the transfer of company shares to the property buyer. This type of transaction can also save the beneficial owner such costs as legal fees and stamp duty.

Additionally, inheritance tax — in the case of transfer to heirs — would not be applicable if an offshore company is the owner of the piece of real estate. While in the case of the beneficial owner’s death, the obtention of a probate can be avoided, meaning a simplified and more streamlined transfer of property ownership.

Privacy is another reason to opt for an offshore company to hold real estate, as in many offshore jurisdictions, public records of company ownership are not available. And for further confidentiality, such companies can be formed with a nominee director and/or shareholder, who can act on behalf of the beneficial owner, thus the owner’s name does not appear in the company’s corporate documents.

Once the offshore company is formed, an international bank account can be opened in the name of the company, and this account can be the one to receive rental income when necessary or the final transaction when the sale of the property is eventually made. This account can also be used for administering the real estate’s fees and payments to any property managers, saving the beneficial owner from using their personal accounts.

SFM works across 15 different jurisdictions and we offer businesses the possibility of forming an offshore incorporation in as rapidly as 24 hours, followed by the opening of an international bank account within a matter of days.

From start to finish, SFM can handle all company formation and bank account opening processes for you. We offer a one-stop-shop for all your corporate and bank account opening service requirements. To start the process today, complete an online order form at the following link: ORDER NOW

 

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