We moved out of our primary residence recently and decided to rent it out. But our accountant advised us not to move it into our existing corporation because we would have to pay a huge land transfer tax.
Oh of course there is a land transfer tax implication. Depending on your need and your want, it may or may not be effective for your situation. The video is intended to share general idea, not meant to be individual tax advice.
Hey, great video! I currently own five properties, all of which are leased to a property management corporation that I also own. This corporation, as specified in the lease agreements, is authorized to sublease the properties to tenants. This is to provide me legal protection as well as tax savings. My lawyer advised that this setup is preferable to transferring the properties directly to a corporation to avoid land transfer tax. Do you have any thoughts on this arrangement?
If you are flipping within a corporation, can you confirm that your tax rate is 12% and not 100% of the profit? What is the difference in tax of flipping a home in six months in a corporation versus as a personal project? Thank you.
Just to clarify. 100% of the profit is taxable, the taxable amount is subject to the applicable tax rate. my next video will show you an example. Stay tuned.
4 rentals under my personal name if I decide to do an estate freeze and transfer all of them into a corporate structure What about the mortgages ,is it best to transfer one at a time when the mortgage comes up for renewal? I would imagine I would have to requalify for mortgage again under corporation name Or can I keep the same mortgage on it And will this trigger a capital gain For the CRA would it be like I’m selling it to the corporation Great video !
Yes it is best to transfer the mortgage at the time of renewal, especially if it is a closed mortgage. The transfer will trigger capital gains but you can filed an election to defer. I recommend you schedule a consultation with the team to review the process and examine your options
Thanks for the great video, Cherry. I attended your one of your seminars on May9, where you mentioned about giving your corporation/trust some rights over a property while you own that property in your name (personally) or something like that which can give you the best of both worlds. Can you pls elaborate a little or give me the link to that video? Thanks.
The name of the RUclips is "How to Invest in Real Estate Using a Trust Agreement in Ontario" and is from about a year ago. If you still have questions after watching the video I recommend that you schedule a consultation with my team to review your exact situation.
Not all investments are qualified investments within your registered plan. I don't think a private company that's owned primarily by you would qualify.
Fantastic video as always! Quick question - if I purchase investment properties within my active business corporation does the income from the rental properties get taxed at 12.2 percent or would it get taxed as passive income which therefore would make it much higher?
Wow. Thank you for the great video. If I own 3 rental properties and plan to have 5 in total. Would you recommend to incorporate and move the properties into the corporation?
I may or may not be, depending on what you do with those rentals (Airbnb vs long-term rental), your tolerance with risk, your long-term plan with these properties, etc. Also, where your money is coming in from.
Can someone buy a vehicle within the corporation…. and would that money be tax free even if we buy an expensive vehicle ? For example if we have 500,000 in the corporation and we want to buy a vehicle for 350k and it’s 90 percent business use , can we buy it from the corporation and pay personal income tax just on the ten percent which is 35k ? Or would the purchase of the car be treated as a dividend ?
If you buy a vehicle in the corporation, there's something called standby charge. It goes back to your personal use % of the vehicle vs the business use of your vehicle. The higher the personal use, the higher amount the standby charge you would need to report on your personal tax return.
@@RealEstateTaxTips So if it’s only for business use like freight trucks ,, then the money wouldn’t be taxable at all if it’s bought in the corporation ?
Hi Cherry, I have 3 rental properties that almost pay off the mortgage. Total rental profits $ 30,000 per year! Thinking to retire next year. Also, I have a good pension from work. I like to pass on the properties to my daughter when I pass away. Wondering if I should incorporate or not. Or should I sell it and give it to my daughter cash.
A conversation worth having with your daughter first, then have a sit down conversation with an accountant to make sure you know the tax implication of owning them till you die, setting up a corporation, or selling them cash to make the most informed decision. If you do not currently work with an accountant, our team is more than happy to have a conversation with you and see if we can work together as well.
Hi Cherry, great video🎉 . If I rent out my primary residence for 2 to 3 years after living in for 3 years without any capital appreciation applied, how could this rent income affect capital gains when sale happens ? Do I have to do any election when turning to rental if it is my only property? Thanks❤
I'm a bit confused at your questions, but generally speaking you might be able to extend your primary residence exemption (assuming you stay as Canadian tax resident) and you and your family (common law partner) do not have any other properties designated as PR. It is difficult to give generic answer when the context is limited. As always, if you have further questions, feel free to call us at 416-548-4228 or email us at admin@cccpa.ca and our team will be happy to help
Hi Cherry! I stumbled into your videos and love it so much. I am in Quebec but want to move to Alberta soon. I own 3x rental properties (all personal properties 50-50) with my wife. We kinda want to incorporate in Alberta (since we plan to move from QC to AB) and move our rental properties into the corporation. Is it too late? Is the section 85 rollover still gonna work for us as 50-50 owners of our properties? We want to incorporate because we do not know if we want to keep all our properties in Quebec. Might want to sell some and re-invest in other properties in Alberta if it makes more sense for us. What are your thoughts?
If you want to sell some, not sure if it is worth the hassle to move it to a corporation. Make sure you check out my other videos - on cost incurred on transferring properties to a corporation. Make sure you consult with someone who knows your situation before making the move. Do a cost benefit analysis. If you currently don't work with a professional accountant, we're always here to help.
I’ve heard if you only several properties in a corporation, you would not be eligible for small business income tax as it’s considered passive income and hence taxed at much higher tax bracket. Is this true?
Hi Cherry, great video! 👍 Couple of questions: a) what taxes needs to be paid if I move an investment propery from one corporation that I own to another? b) does Ont corp has to be set up in some specific way to be able to move the property to the corporation?
Sorry I completely missed your comment. It's best to consult with a professional accountant since you're trying to achieve a specific objective. Feel free to reach out to your accountant. If you don't currently have one, we're always here to help.
We do have a video on whether you should setup PREC or not. A PREC can buy properties - you may run into problems qualifying for mortgages from the bank's perspective but from a pure tax law perspective, you can buy properties in your PREC.
@@Sir__Jason rental income is considered specified investment business income...and it is taxed differently from active business income. It is taxed under a regime called non-eligible Refundable Dividend Tax System.
Absolutely. Not sure if I know how to invest in stock but can definitely help you with tax side of things. Feel free to reach to our office at 416 548 4228
Hi, thanks for the great video. The subscription link is not valid. Can you please check? Plus quick question, i have a business number for my real estate agent income. I am trying to open a short term rental(active business) business. Do you recommend to open a separate business account? If so, sole proprietorship is enough to start with? Thank you so much!!
Hi Nayoon, thanks for asking this great question. You don't need to open a separate HST account to account for the HST that you would have to charge on your short-term rental. With respect to your sole proprietorship question - it really goes back to your particular situation. Some short-term rental is considered active business while some other short-term rental are more long-term buy and hold. Depending on what your income level is with real estate agent income + Airbnb income vs how much you need, it may or may not be beneficial for you to setup a corporation to own your Airbnb in your personal name as sole proprietor. As always, make sure you consult with professional accountant who know your situation. And if you are not currently working with a real estate accountant, feel free to give our office a call and our team will be able to assist you - 416-548-4228.
Cherry I want to set up an appointment with you to discuss taxes and property in the Philippines through a corporation. Do you do teams calls at all. Thanks Tim
You don't need more than five full time employees to claim small business deduction - for as long as your business isn't considered specified investment business.
@@RealEstateTaxTips so let's say I set up a corporation and provide accounting services such as t1 and t2 preparation - this is eligibility for small business deduction even though I don't have 5 or more employees?
Like I said, different people have different reason to setup corporation and certainly it isn’t a good idea for many as well. It is a case specific situation rather than a general blanket statement. All the best to your portfolio
We moved out of our primary residence recently and decided to rent it out. But our accountant advised us not to move it into our existing corporation because we would have to pay a huge land transfer tax.
Oh of course there is a land transfer tax implication. Depending on your need and your want, it may or may not be effective for your situation. The video is intended to share general idea, not meant to be individual tax advice.
Hey, great video! I currently own five properties, all of which are leased to a property management corporation that I also own. This corporation, as specified in the lease agreements, is authorized to sublease the properties to tenants. This is to provide me legal protection as well as tax savings. My lawyer advised that this setup is preferable to transferring the properties directly to a corporation to avoid land transfer tax. Do you have any thoughts on this arrangement?
I have a corporation with one property. What is the best way to Transfer to my family.
Gift
If you are flipping within a corporation, can you confirm that your tax rate is 12% and not 100% of the profit? What is the difference in tax of flipping a home in six months in a corporation versus as a personal project? Thank you.
Just to clarify. 100% of the profit is taxable, the taxable amount is subject to the applicable tax rate.
my next video will show you an example. Stay tuned.
Hi there - what happens if one transfer the rental property from personal to corporation when the property rate has decreased.
4 rentals under my personal name if I decide to do an estate freeze and transfer all of them into a corporate structure
What about the mortgages ,is it best to transfer one at a time when the mortgage comes up for renewal?
I would imagine I would have to requalify for mortgage again under corporation name
Or can I keep the same mortgage on it
And will this trigger a capital gain
For the CRA would it be like I’m selling it to the corporation
Great video !
Yes it is best to transfer the mortgage at the time of renewal, especially if it is a closed mortgage.
The transfer will trigger capital gains but you can filed an election to defer.
I recommend you schedule a consultation with the team to review the process and examine your options
Another great video thank you
Glad you enjoyed it
Thanks for the great video, Cherry.
I attended your one of your seminars on May9, where you mentioned about giving your corporation/trust some rights over a property while you own that property in your name (personally) or something like that which can give you the best of both worlds. Can you pls elaborate a little or give me the link to that video? Thanks.
The name of the RUclips is "How to Invest in Real Estate Using a Trust Agreement in Ontario" and is from about a year ago. If you still have questions after watching the video I recommend that you schedule a consultation with my team to review your exact situation.
What if you invest in your corporation through your TFSA and pay dividend back to the TFSA. Is this allowable and tax free to the individual?
Not all investments are qualified investments within your registered plan. I don't think a private company that's owned primarily by you would qualify.
Fantastic video as always! Quick question - if I purchase investment properties within my active business corporation does the income from the rental properties get taxed at 12.2 percent or would it get taxed as passive income which therefore would make it much higher?
Great question - your active business income would still be taxed at 12.2% whereas your passive income is still taxed at 50%, with 30% refundable.
@@RealEstateTaxTips what 30% refundable means?
Wow. Thank you for the great video. If I own 3 rental properties and plan to have 5 in total. Would you recommend to incorporate and move the properties into the corporation?
I may or may not be, depending on what you do with those rentals (Airbnb vs long-term rental), your tolerance with risk, your long-term plan with these properties, etc. Also, where your money is coming in from.
Can you expand on the negative aspects of long-term buy n hold in a corp?
Cost of filing can be expensive. Potential double taxation if you don't do estate planning.
Can someone buy a vehicle within the corporation…. and would that money be tax free even if we buy an expensive vehicle ?
For example if we have 500,000 in the corporation and we want to buy a vehicle for 350k and it’s 90 percent business use , can we buy it from the corporation and pay personal income tax just on the ten percent which is 35k ?
Or would the purchase of the car be treated as a dividend ?
If you buy a vehicle in the corporation, there's something called standby charge. It goes back to your personal use % of the vehicle vs the business use of your vehicle. The higher the personal use, the higher amount the standby charge you would need to report on your personal tax return.
@@RealEstateTaxTips So if it’s only for business use like freight trucks ,, then the money wouldn’t be taxable at all if it’s bought in the corporation ?
Hi Cherry, I have 3 rental properties that almost pay off the mortgage. Total rental profits $ 30,000 per year! Thinking to retire next year. Also, I have a good pension from work. I like to pass on the properties to my daughter when I pass away. Wondering if I should incorporate or not. Or should I sell it and give it to my daughter cash.
A conversation worth having with your daughter first, then have a sit down conversation with an accountant to make sure you know the tax implication of owning them till you die, setting up a corporation, or selling them cash to make the most informed decision.
If you do not currently work with an accountant, our team is more than happy to have a conversation with you and see if we can work together as well.
Hi Cherry, great video🎉 . If I rent out my primary residence for 2 to 3 years after living in for 3 years without any capital appreciation applied, how could this rent income affect capital gains when sale happens ? Do I have to do any election when turning to rental if it is my only property? Thanks❤
I'm a bit confused at your questions, but generally speaking you might be able to extend your primary residence exemption (assuming you stay as Canadian tax resident) and you and your family (common law partner) do not have any other properties designated as PR. It is difficult to give generic answer when the context is limited.
As always, if you have further questions, feel free to call us at 416-548-4228 or email us at admin@cccpa.ca and our team will be happy to help
Hi Cherry! I stumbled into your videos and love it so much. I am in Quebec but want to move to Alberta soon. I own 3x rental properties (all personal properties 50-50) with my wife. We kinda want to incorporate in Alberta (since we plan to move from QC to AB) and move our rental properties into the corporation. Is it too late? Is the section 85 rollover still gonna work for us as 50-50 owners of our properties? We want to incorporate because we do not know if we want to keep all our properties in Quebec. Might want to sell some and re-invest in other properties in Alberta if it makes more sense for us. What are your thoughts?
If you want to sell some, not sure if it is worth the hassle to move it to a corporation. Make sure you check out my other videos - on cost incurred on transferring properties to a corporation. Make sure you consult with someone who knows your situation before making the move. Do a cost benefit analysis. If you currently don't work with a professional accountant, we're always here to help.
I’ve heard if you only several properties in a corporation, you would not be eligible for small business income tax as it’s considered passive income and hence taxed at much higher tax bracket. Is this true?
Great Video Cherry.
Thank you!
Hi Cherry, great video! 👍
Couple of questions: a) what taxes needs to be paid if I move an investment propery from one corporation that I own to another? b) does Ont corp has to be set up in some specific way to be able to move the property to the corporation?
Sorry I completely missed your comment. It's best to consult with a professional accountant since you're trying to achieve a specific objective. Feel free to reach out to your accountant. If you don't currently have one, we're always here to help.
is it also harder to get a mortgage on a property in corporation? I was quoted like 2% higher rate
Depending on who you talk to ...it is a lot more paperwork for sure...
Informative
Can prec buy a property ? Also it would be great if you can make a video of advantages of prec ?
We do have a video on whether you should setup PREC or not.
A PREC can buy properties - you may run into problems qualifying for mortgages from the bank's perspective but from a pure tax law perspective, you can buy properties in your PREC.
What would be the tax rate for the rental properties purchased under the prec? still active business rate?
@@Sir__Jason rental income is considered specified investment business income...and it is taxed differently from active business income. It is taxed under a regime called non-eligible Refundable Dividend Tax System.
Hey!! Love your videos. Would you take on clients in BC? Corp, real estate, and stock is what I would like your help with :-)
Absolutely. Not sure if I know how to invest in stock but can definitely help you with tax side of things. Feel free to reach to our office at 416 548 4228
@@RealEstateTaxTips Cherry, you can help with BC residents too? That's great to hear. Do you prepare taxes for BC as well? Thanks!
Great video
Thanks!
Hi, thanks for the great video. The subscription link is not valid. Can you please check?
Plus quick question, i have a business number for my real estate agent income. I am trying to open a short term rental(active business) business. Do you recommend to open a separate business account? If so, sole proprietorship is enough to start with? Thank you so much!!
Hi Nayoon, thanks for asking this great question. You don't need to open a separate HST account to account for the HST that you would have to charge on your short-term rental.
With respect to your sole proprietorship question - it really goes back to your particular situation. Some short-term rental is considered active business while some other short-term rental are more long-term buy and hold.
Depending on what your income level is with real estate agent income + Airbnb income vs how much you need, it may or may not be beneficial for you to setup a corporation to own your Airbnb in your personal name as sole proprietor.
As always, make sure you consult with professional accountant who know your situation. And if you are not currently working with a real estate accountant, feel free to give our office a call and our team will be able to assist you - 416-548-4228.
@@RealEstateTaxTips thank you. I greatly appreciate you taking the time to reply on my comment.
Thank you 🙏
Pretty dress 👗
Cherry I want to set up an appointment with you to discuss taxes and property in the Philippines through a corporation. Do you do teams calls at all.
Thanks
Tim
Please contact my office and the team will assist you in scheduling a call to review your situation.
You need more then 5 employees to claim small business deduction
You don't need more than five full time employees to claim small business deduction - for as long as your business isn't considered specified investment business.
@@RealEstateTaxTips so let's say I set up a corporation and provide accounting services such as t1 and t2 preparation - this is eligibility for small business deduction even though I don't have 5 or more employees?
@@stickmanfinance6789 sounds like you're an accountant, no? Look it up. :)
Not a good idea
Like I said, different people have different reason to setup corporation and certainly it isn’t a good idea for many as well. It is a case specific situation rather than a general blanket statement. All the best to your portfolio
You want to pay more capital gain tax?
This method get harm by capital gain tax without 250000，very bad