Introduction of property as capital into a partnership firm/LLC/Pvt. Ltd.
I am planning to start a business which would primarily be into leasing out properties and investing in new properties. For now, me and my dad own certain properties of considerable value. We would like to introduce those into the said company/firm. My queries are:
1. For the said business, is it advisable to form a partnership firm/LLP (we have full faith in each other and hence we prefer firm over LLP), Pvt. Ltd. or as two sole proprietorships, one for each.
2. What are the tax implications and stamp duty implications for transferring the said properties to the firm/company. I read somewhere that there is no need to officially transfer (written sale/transfer deed) the said properties to the firm but the partners can just intend to bring their separate properties to the firm as stock of the firm without officially transferring the properties to the firm. And by virtue of Contract Act and Partnership Act, the properties are to be treated as the firm properties.
3. Since, my business would be leasing and investing in new properties, will the rent income be treated as income from house property or business income. And if business income, can I claim the standard 30% deduction that I get while claiming the income from house property.
Or is it better to the not get into the firm/company and just operate as sole proprietorship.
Asked 18 days ago in Property Tax
Thank you for the answers. While I am fair bit clear that the properties should be transferred to the firm and the relevant stamp duty tax would be applicable, I am not clear on what kind of company to incorporate.
The primary goal here is to acquire properties (in addition to the existing properties) for renting purposes and the main aim is to have a rental business. The current rental income is around 15 lakh per annum with a target of 24-27 lakh per annum in the next 2 years. Renting out would be the only income and this is my full time business. Is it advisable to have sole proprietorship, partnership firm, LLP or Pvt. Ltd.?
Asked 15 days ago