Purchased property from a company through a loan from an individual

Purchased property from a company through a loan from an individual

 

Question:
Hello!

I have a company - Ltd., which years ago bought an apartment. To buy this apartment, I gave the company a loan because it had no funds available. The loan was granted for a period of 5 years. During these five years, however, the company did not raise the money to repay my loan, so things remained the same. Now the company has sold the apartment and it is time to repay my loan with accrued interest and lost profits. My question is, after the company repays my loan, will it owe taxes to the state at the end of the accounting year and in what amounts, if so? Do I owe taxes - as these are my own funds that I borrowed years ago? The company did not carry out any activity other than renting out the apartment in question, for which it had paid its taxes over the years.

Thanks!

 

Answer:

Hello,

When selling the apartment, the company reports some financial result (profit or loss). In any case, an activity report will have to be prepared and an annual tax return will have to be submitted, and if the result is a profit, the due corporate tax will have to be paid - 10% on the amount of the profit.

From the point of view of the individual - there are two aspects.

On the one hand, the interest income from loans is a taxable income and you should declare it and pay the due tax in the amount of 10% on the income

On the other hand, each year with the annual tax return you are obliged to declare the granted and / or received loans as follows:

- for outstanding part of the provided cash loans during the year for which you submit a declaration, if their total amount exceeds BGN 10,000.00.

- for the outstanding at the end of the year for which you submit a declaration balances of loans granted during the same and the previous 5 tax years, if the amount of these balances in total exceeds BGN 40,000.00.

We hope we have been helpful.

Greetings!