Building a house on your own company

[dflorin]

Hi,

I would appreciate any ideas / comments / advice on the following scenario:

1. I have a plot whose value is, say, 70.000 EUR.
2. I want to build a house on it. If I build the house traditionally that means:
a) I take a loan from the bank, say 200.000 EUR.
b) I start building a house and pay monthly back to the bank some 1000 EUR for about 20 years.
The total cost of this would be 200.000 + interest. The 200.000 is the money paid for the house (including VAT, mostly 23%)
3. An alternative way to build the house would be the following:
a) I put up a company (OY), which is VAT-liable
b) I transfer the plot to the company as capital. Does the company have to pay "varainsiirtovero" on this operation? (4% * 70.000 = 2800 EUR)
c) The company takes out a loan (200.000 EUR) to build the house. The loan will be paid by myself (the owner of the company), and it will go as capital increase in the company (can this be done so that I don't have to change the company's papers every time the capital is increased?)
d) The company spends the 200.000 EUR to build the house (incl. VAT 23%). But in this case, the VAT is deductible, and since the company has no other income (negative balance), the state will return the VAT at the end of financial year (negative VAT balance). It means the whole cost of building the house will be 200.000 - 23%*200.000 = 154.000 EUR
So in this case (in the worst case scenario where also "varainsiirtovero" must be paid), the total cost for building the house would be 156.800 EUR, a huge saving from the initial 200.000 EUR.

The house can than remain the property of that company (which at that point has a negative balance due to investing but without any income), or...

... the owner (myself) can withdraw the capital invested in the company, and the firm can be dissolved. There would be no tax on any of the withdrawn capital, is that correct? In the worst case, there would be just another "varainsiirtovero" paid by the owner, to transfer the ownership of the house. That would be 4% * 200.000 = 8.000 EUR, which would still make the total cost get to 164.800, meaning a net difference of 35.200 EUR compared to traditional scenario.

Am I missing something here? This is too good to be true...

Cheers,
Florin.

[rinso]

If you start living in the house owned by the company, you have to pay rent. The rent is taxable income for the company.
If you don't pay rent (or very little), but live for free it is considered taxable income for you. (tax office estimates the amount)
If you dissolve the company to quickly, it can be considered a trick to avoid paying taxes, which also can leave you with a tax claim.

[Upphew]

Dissolving company with negative balance might also be problematic.Auditor might leave nasty notes. As a sole stock owner you might end up personally liable (and without prior business you would probably end up as a guarantor for the company's loans).

[Mook]

How does it stand with Taloyhtiös and VAT?

[Rick1]

With my knowledge it is always more than one house so you share the costs. Have not heard of one (private) house build under company construction by the builder. Waiting when Penelope jumps in