The disadvantages of buying property via Sdn Bhd (private limited company)

The disadvantages of buying property via Sdn Bhd (private limited company)

#1 Taxation

The Sdn Bhd will be taxed 24% instead of SME preferential tax rate (17% on first RM600,000 chargeable income, 24% on subsequent chargeable income)

#2 Cost

The cost of setting up a Sdn Bhd run from thousands dollar.

The annual compliance cost on audit, tax and secretarial run from thousands dollar.

#3 Profit distribution

Shareholder can only reap the profit via dividend distribution under the Company Act 2016.

#4 Personal guarantor

The director/shareholder may act as personal guarantor to the bank for loan financing on the property.

#5 Loan Financing Ratio

Bank normally charge higher interest rate and borrowing limits to Sdn Bhd compared with individual.

#6 Transfer of shares

Shares of Sdn Bhd are not openly tradeable and may be difficult to find a buyer.

#7 Closure of company

The closure of sdn bhd may be time consuming and costly.

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