The “House Company”
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In the previous post, we saw an example of how a company can, under certain circumstances, have its income treated as taxable in the hands of the shareholders.
At the request of the company, the company profits can be taxed in the hands of the shareholders (as property income – and taxed accordingly as passive income for both Income Tax and Bituach Leumi purposes), according to each shareholder’s share of the profits. This is different to a “Family Company” wherby only one of the shareholders is taxed on the entire profit.
Furthermore, the application to be a “house company” need not be made in advance, and can be changed every year – as per the choice of the company and the shareholders. Again, this is different to a “Family Company” where the status must be requested soon after incorporation and once the status has been changed by the Company, it cannot reaquire such a status.
The “Family Company” can therefore, potentially, be a very attractive option for those who want to invest in property across the world, but without owing the property outright (e.g. for inheritance tax purposes).