[luxome]

I'm sure there are members here who own multiple real estates. How do you guys own/manage your real estate properties to get the greatest benefit (e.g., tax)?

When is it necessary to own/manage your real estate under a corporate (sole-proprietor) name? What do you guys do to take "advantage" of the tax law legally.

Your help/advice/suggestions is greatly appreciated.


I spoke to my accountant and he wasn't very helpful regarding this issue (i'll be switching my accountant soon).

 

[Bentley]

Go to a real estate/investment focused accountant. They'll be able to answer everything. Generally, owning properties as individual businesses makes sense. But I'm not a pro in this area so talk to an accountant.

 

[Civdis]

I own a small property development company and offer the following comments.

It really depends on the structure of your investments and how large you intend to get. From a tax point of view, Revenue Canada considers property holding companies to be for investment purposes and all income is considered investment income, not operating income. It is not until you get fairly large with multiple properties and 5 full-time equivilent employees that the income is considered operational and thus taxed at a lower corporate rate. Generally speaking, for small investors with a few properties, it is no advantage to incorporate. There is simply no tax advantage and the banks normally want personal guarantees so the limited liability isn't of much use either. If you have multiple business partners with multiple properties, or get very large, incorporation of each asset is normally the best way to go. Financial statements must be prepared for each corporation which can get costly and adds work.

This is a very complicated subject but I have tried to give some general direction.

 

[luxome]

I own a small property development company and offer the following comments.

It really depends on the structure of your investments and how large you intend to get. From a tax point of view, Revenue Canada considers property holding companies to be for investment purposes and all income is considered investment income, not operating income. It is not until you get fairly large with multiple properties and 5 full-time equivilent employees that the income is considered operational and thus taxed at a lower corporate rate. Generally speaking, for small investors with a few properties, it is no advantage to incorporate. There is simply no tax advantage and the banks normally want personal guarantees so the limited liability isn't of much use either. If you have multiple business partners with multiple properties, or get very large, incorporation of each asset is normally the best way to go. Financial statements must be prepared for each corporation which can get costly and adds work.

This is a very complicated subject but I have tried to give some general direction.

wow, i have so much questions i don't know where to even begin. Thanks for the response, your just the kind of guy i'm looking to hear from. Someone who's done it and experienced it. I'm sure i can learn a lot from you.


Are there any advantages buying with a Soleproprietorship "company" name? i ask because i noticed a few purchasers buy properties under their 'number company names' - e.g., Ontario 1234545.

 

[iheartproperty]

I'm sure there are members here who own multiple real estates. How do you guys own/manage your real estate properties to get the greatest benefit (e.g., tax)?

When is it necessary to own/manage your real estate under a corporate (sole-proprietor) name? What do you guys do to take "advantage" of the tax law legally.

Your help/advice/suggestions is greatly appreciated.


I spoke to my accountant and he wasn't very helpful regarding this issue (i'll be switching my accountant soon).

Use a bare trustee structure. Talk to your lawyer.