Question regarding corporations (real estate)

[bitteeinbit]

Say I were to buy my first condo not under my own name, but make a corporation and buy it under that corporate name, what would be the advantages and disadvantages?

1-When you setup a company, you decide how much startup capital it has, correct?

2-Say my company is loosing money. I know I won't be able to borrow extra money from a bank. How can I add from my personal savings to the company? I just issue more shares and "dump" money in? Sort of like a private financing?

3-Assuming I would want to rent the condo out, wouldn't it be easier to do so under a corp? I'm thinking of incorporating at the provincial level btw, as it's apparently much simpler. I know that mortgage interest is apparently a write-off for individuals, what about corporations? I assume the same applies. It seems to me that as a company more expenses could be written off. Are mortgage rates better or worse for companies? Either way, if interest is a write off I guess it doesn't matter does it?

Advantages/disadvantages? What are the implications of both?

Any insight appreciated.

[broken_legs]

Unless your corporation has massive amounts of cash or some previous credit history/assets/cash flow, me thinks any mortgages or loans in said corporations name will still be linked to you and your credit rating.

I know lots of people that consult, but know one who has done what you are asking about.

People do set up corporations to maximize tax free income on cash flowing properties - ie mgmt company and property ownership under 2 separate entities.

[UndrgroundRider]

1. You will probably need to personally guarantee the mortgage.

2. You have to report any capital gains on the property when you sell it. (If you lived in it and owned it personally you would not.)

3. More paper work & tax & legal requirements

[Weapon_R]

As mentioned, you'll have a hell of a time getting qualified under the corporation alone. I've tried

[heavyfuel]

Originally posted by Weapon_R
As mentioned, you'll have a hell of a time getting qualified under the corporation alone. I've tried

X2. 6 figures + per year, near perfect credit, no dice.

I ditched my incorporation. Waste of time IMO unless you're making 500k/yr and have many employees.

[Jason Lange]

To add, your interest rate if you could get into the property under corporation will also be higher. Maybe not tons, couple percent higher, you'd better have some cash-flow through the corporation too. The lender will want at minimum 2 years of financials that give the corporation a means to pay the loan. On top of your personal guarantee.

[turbotrip]

Originally posted by Weapon_R
As mentioned, you'll have a hell of a time getting qualified under the corporation alone. I've tried

what do you mean? he wont be able to write off expenses? or he wont be able to register a corporation in the first place?

if its the 2nd option, have restrictions changed in the past few years?

[Jason Lange]

Originally posted by turbotrip


what do you mean? he wont be able to write off expenses? or he wont be able to register a corporation in the first place?

if its the 2nd option, have restrictions changed in the past few years?

No he means that he would have a really hard time qualifying for the mortgage with only the corporation on the title.

Anyone can go start up a corporation if they want, and write off any expenses that the corporation may encounter.

[KappaSigma]

You living in it? If so I wouldnt do a corp....you cannot get your personal exemption when you go to sell it.

[bitteeinbit]

Originally posted by Jason Lange
To add, your interest rate if you could get into the property under corporation will also be higher. Maybe not tons, couple percent higher, you'd better have some cash-flow through the corporation too. The lender will want at minimum 2 years of financials that give the corporation a means to pay the loan. On top of your personal guarantee.

That's what I though, mortgage rates are higher for corps. I guess it doesn't make much sense to incorporate just to buy a place then. I'm gonna bu a whole bunch of real estate book to read during the holidays. Need to know more about tax deductions and all that.

[Sugarphreak]

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