Incorporating Your Real Estate Business in Canada 2021
ฝัง
- เผยแพร่เมื่อ 4 ต.ค. 2024
- We are back with Canada's favourite real estate lawyer Ryan from Carson Law and in this video he breaks down the process of incorporating our real estate activities, when we need to reach out to a lawyer and ALL your questions regarding incorporating your real estate business in Canada in 2021!
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Matt McKeever is a CPA, CA and Real Estate Entrepreneur in London, Ontario. On this TH-cam Channel Matt discusses a variety or real estate and personal finance strategies and tactics. Including: How to BRRRR Real Estate, The Importance of Investing for Cash Flow, How to Reach Financial Independence Retire Early, Safe Withdrawal Rates, Frugality and Reducing Personal Consumption & Embracing Minimalism.
Matt began investing in real estate at age 25 by purchasing a student rental near Fanshawe College.
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Hi Matt, great video! Folks need to be aware that the lower tax rates from incorporating are if your corporation is deemed active rather than passive. Part of that threshold requires your corporation to have at least 5 full time employees. Cheers Rob
Thanks for adding to the discussion Rob!
Vitally important piece!
Yes. Vitally important point indeed.
Ryan has a creative accountant lol. But jokes aside, he probably is referring to a property management company that is qualifying as an active business. So it’s not all rental income, but more like the 5% to 10% of the rental revenue that is being paid to the property management company and enjoying the tax deferral.
Thank you Matt. This is the stuff that most people never cover. Usually it's "it depends" with no context or examples.
Happy this helped!
Thanks! Any follow up questions you'd like to see us cover in future videos?
@@CanadianRealEstateChannel I am overwhelmed with questions since I am in the process of trying to buy my first home. I think once I do that, many things will be answered through the process and if I have any money left after that, I'll try to invest it in another property.
@@AberrantArt Would be so interested to know how your journey into your first prop went! Any lessons shared would be very appreciated.🙏
@@TaherAfridi biggest take aways from my experience was - don't just stop with the first loan officer. I had one tell me I needed to wait a year because I didn't have enough job history at my new employer. Also said I needed 30% down because of it. Found someone else with better terms and less resistance.
Second was that the home inspector can miss many things in the winter. Also probably good to get 2 different inspectors. The one I had missed many things that should have been noted but were overlooked.
Speaking as CPA specializing in tax - tax should not be the primary reason you choose to incorporate. You will not benefit from the lower corporate tax rates unless you're earning "active income." For rental income to be considered active income, you need to have at least 5 full time employees. That said, there are other structures you can use that provide "creditor proofing;" for example, using a bare trust structure.
If you have any tax related questions, feel free to reach out!
Appreciate you adding to the discussion. Yeah some investors will set up a 3 tier structure. For me umbrella insurance policy is good enough of a sleep at night policy for personally owned properties.
Hello tax man ! If you keep the money inside the inc. Like he says, will it be taxed at 50% like a passive income ?? Or can you use it with tax benefits to reinvest in the business ( by buying new realestate with it - or paying repairs on some units ? How does it work ?
How can we reach out to you?
Thank you this was great information 👍🏼
Thanks for tuning in!
Great information! Thank you Matt & Ryan!
Thanks! What future topics would you like to see us cover
Thanks so much.
You're welcome. We hope you implement vigorously. Cheers, @adamjdmartin
I watched the video carefully. Really good content. Is it easier to get financing when you're incorporated?
Depends on a variety of factors - but it's no silver bullet
@@CanadianRealEstateChannel Hi Matt - super helpful video. Do you have any video on financing the first property under incorporated business (no income)?
GG, Thank you
Very important information to protect yourself. Great video guys. Could you recommend a real estate accountant in southern Ontario taking on clients?
Absolutely! Galleon CPA ask for Mit or Pir and tell them Matt recommended you
@@CanadianRealEstateChannel Thanks Matt. Much appreciated.
Great video Matt, question for you, when you hold real estate in a corporation is the net operating income not taxed as a passive investment (38% or so)? Ryan mentioned the lower corporate rate of 12 - 18% which would normally be for a active business?
Also do you know if Canada has an option similar to the US 1031 exchange when looking to sell a property and use the funds to purchase another property?
You can do a maneuver like this just check on the small window of time allowed to do so.
For the love of god no more numbered companies. I still don’t know mine.
#firstworldproblems - but very real ones too
@@CanadianRealEstateChannel lol
Thoughts on using Nominee Companies for a GP/LP structure
This is great information, thanks a lot for sharing!
🔥🔥🔥
What other real estate law concepts would you like us to cover with Ryan?!
@@CanadianRealEstateChannel Renting during the pandemic, and landlords' rights. With the eviction moratorium going on in the US (enforced by the CDC... who has no legal power to enforce them...) it would be great to know what we as landlords can do if our tenants stop paying rent. Thanks!
Edit: I see you made a recent video about that so I'll check it out. Have you been seeing issues with tenants not paying rent lately?
Can you do a video on best corporate structures and trust so that when you pass succession is easier. Please explain taxes or probate involved with a active real estate corporate structure and maybe a trust. Please explain what’s best in regards to taxes and succession
This was an awesome video
Thanks - what should we cover in future videos with Carson Law?
@@CanadianRealEstateChannel i think talkin about ways to use escrow to purchase properties wiuld be really cool and any info on using cryptocurrency for purchases aswell...threw escrow or other means that would be an interesting show Matt!
Nice socks!
he he he thanks for watching and commenting!
Thanks Matt and Ryan
Glad you got value! Any follow up questions?
Do you need to have employees to incorporate ?
I started with asset and mortgage on my name, how can I switch it to corporate?
No land transfer tax in Alberta and Saskatchewan. So you can turn these properties into a corporation without having to pay land transfer tax fee,, if you have them in your name, :)
How does the bank (lender ) factor into incorporating? Would a title change be needed ?
For an existing property yes you'd have to bring it into the corp - title change and get a new mortgage (unless portable)
Awesome video! Anyone recommend a good real estate accountant in Northwestern Ontario?
Mitcpa
I'm really interested in how write-offs work if you are incorporated vs not. I'm thinking of doing a really slow BRRR. So I will likely be at a loss in my first year because of the cost of renos. I only make 36,000 at my day job. I'd like to be able to write-off the renos against my personal income. Any help would be appreciated.
Write to an expert directly on what's app for proper guidance and assistance
how much does it cost to incorporate a small real estate busienss?
If you'd like to get a cost estimate please email us at info@carsonlaw.ca
I recommend reaching out to Carson for specific guidance (don't worry they don't start the billing meter the moment they pick up the phone - hahaha)
First
Thanks for watching & commenting!
One or the most important reasons to incorporate is in my opinion having a separate / parallel credit to be used … i mean after 2 years or with enough equity you should be able to get new real estate on top of your « personal » credit possibilities.
2nd is family trust. I mean all i do , and i think most people think about is « legacy » ! Small or big, i think it might have tax, capital gains, easy of « split » between children etc to have a usefullness to get incorporated