Mortgage Paid Off? Now What?

[Xtrema]

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The CRA figured out how to close this loophole ages ago.

What if you turn your car into a moving billboard for your biz?

But end of the day, there are plenty of accountants who DGAF and I have yet know anyone got audited for it.

[Buster]

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What if you turn your car into a moving billboard for your biz?

But end of the day, there are plenty of accountants who DGAF and I have yet know anyone got audited for it.

If CRA audits you, they wont give a shit about stickers on your car.

Having a fancy car on your corporate balance sheet is one of the biggest red flags for CRA

[killramos]

I just pay my taxes and buy thing things with after tax dollars like a chump

[you&me]

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If CRA audits you, they wont give a shit about stickers on your car.

Having a fancy car on your corporate balance sheet is one of the biggest red flags for CRA

But Shak's correct if your primary concern is liability, where that ends with the corp.

That said, I can't imagine a scenario where HELOC'ing a car puts someone in a position of losing their primary residence

[suntan]

I guess dealerships aren't smart enough to make people sign a personal guarantee for the loan.

[Buster]

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But Shak's correct if your primary concern is liability, where that ends with the corp.

That said, I can't imagine a scenario where HELOC'ing a car puts someone in a position of losing their primary residence

If your primary concern leasing a supercar is liability, then you have other issues to address.

[you&me]

Touche

[shakalaka]

I don't write off 100% of the cars but as far as the accountants have indicated to me, a portion is allowed and doable which is what we do. We always do the math at the end of year on what renders a better net benefit, writing off a portion of the lease vs mileage driven and we go with whichever path makes most sense. For lease it's pretty straightforward, you are allowed a max write off of $700+ gst if writing off the payments. Doesn't matter if your payment is $5K, you can only still write off $700. But based on the amount of driving I do, my mileage write offs end up being far more beneficial than just straight payments. So it's not like I am driving these cars for 'free' or anything, but I just try to use whatever mechanism is available to get the most benefit I can. Having a good accountant is super beneficial in that regard.

Also CRA doesn't give a shit about small fry like me, they are after the big dawgs.

[shakalaka]

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If your primary concern leasing a supercar is liability, then you have other issues to address.

That is not a concern.

Here's a scenario:

You HELOC a supercar, say $300K. Sure it's all fine and dandy until you get into a big crash. The car drops in value by $100K or more. Now you're still responsible for that entire $300K, even though your car is only worth $200K now. And if they have your home as a collateral you're gonna make sure you swallow the $100K hit no matter what.

Lease doesn't fucking matter. Walk away from it if you want at the end of it, or if its open ended and you can't walk away (like most supercar leases are) then let them fucking seize it. You're never going to have to pay that 100K out of pocket. Of course depends on what your corp has and if it has a lot to lose then you likely wouldn't walk away either but the mechanism is there if need be.

I get that it's not a common situation but not completely far fetched either. But regardless of that be like killramos and just buy cash everything and then you don't got to worry regardless. I personally do consider that a 'chump' way to be (unless you're sitting on millions and millions of cash that you don't know what else you can do with) but if it works for you then doesn't really matter.

IMO if the only way you can buy a supercar is by HELOC'ing it then you shouldn't be getting one. But wtf do I know, I am the least financially responsible person I know so go figure.

[Buster]

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That is not a concern.

Here's a scenario:

You HELOC a supercar, say $300K. Sure it's all fine and dandy until you get into a big crash. The car drops in value by $100K or more. Now you're still responsible for that entire $300K, even though your car is only worth $200K now. And if they have your home as a collateral you're gonna make sure you swallow the $100K hit no matter what.

Lease doesn't fucking matter. Walk away from it if you want at the end of it, or if its open ended and you can't walk away (like most supercar leases are) then let them fucking seize it. You're never going to have to pay that 100K out of pocket. Of course depends on what your corp has and if it has a lot to lose then you likely wouldn't walk away either but the mechanism is there if need be.

I get that it's not a common situation but not completely far fetched either. But regardless of that be like killramos and just buy cash everything and then you don't got to worry regardless. I personally do consider that a 'chump' way to be (unless you're sitting on millions and millions of cash that you don't know what else you can do with) but if it works for you then doesn't really matter.

IMO if the only way you can buy a supercar is by HELOC'ing it then you shouldn't be getting one. But wtf do I know, I am the least financially responsible person I know so go figure.

Have you encountered leasing companies that are willing to take on this risk?

[shakalaka]

Yea I have leased 'exotic' or 'higher-end' vehicles in the past through the corp w/o any sort of a personal guarantee, as have my family members with well-to-do corps. Just depends on the net worth, standing and income of the corp. Obviously no one is going to lease something like that to a brand new incorporated company that has no credit history - at least not without a collateral or personal guarantee.

[Buster]

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Yea I have leased 'exotic' or 'higher-end' vehicles in the past through the corp w/o any sort of a personal guarantee, as have my family members with well-to-do corps. Just depends on the net worth, standing and income of the corp. Obviously no one is going to lease something like that to a brand new incorporated company that has no credit history - at least not without a collateral or personal guarantee.

Then there is no liability advantage of using a corporation.

[killramos]

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Then there is no liability advantage of using a corporation.

No? If the corp owns an underwater asset and you are willing to dissolve the corp then that seems advantageous?

A lot of if’s though.

[Buster]

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No? If the corp owns an underwater asset and you are willing to dissolve the corp then that seems advantageous?

A lot of if’s though.

Dissolve or liquidate and move the assets? In any case, you'd have to find a leasing company that is willing to take on the exposure without having proper additional security. Usually leasing companies do this by a) demanding you have insurance which covers any accident related depreciation or b) insists on a large equity injection (deposit) or c) charges rates which allow them to, in aggregate, protect their portfolio against some predicted level of default. Or all of the above.

In all those cases, you are funding that exposure one way or the other.

[max_boost]

Biz managers are good at tweaking things to make the credit app look attractive

[oster]

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Technically only if you bought equities that pay dividends. Or did that rule change?

Interest paid on loan is tax deducible, ideally dividends cover interest owed.

[shakalaka]

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Dissolve or liquidate and move the assets? In any case, you'd have to find a leasing company that is willing to take on the exposure without having proper additional security. Usually leasing companies do this by a) demanding you have insurance which covers any accident related depreciation or b) insists on a large equity injection (deposit) or c) charges rates which allow them to, in aggregate, protect their portfolio against some predicted level of default. Or all of the above.

In all those cases, you are funding that exposure one way or the other.

Except they can't come after your personal home/main residence and you won't be homeless because you didn't HELOC that shit. Going back to the actual point of this whole thing.

[killramos]

Do you know how many layers and steps of fucking up you have to do before you lose your home becuase you bought a car on your HELOC?

If you are at risk of being that much of an idiot I have no idea should would extend you the credit in the first place.

[shakalaka]

If shit hits the fan it's always good to be protected, there are tons of scenarios like getting fired with no backup or savings, getting hurt while having no insurance in private field and not being able to earn an income, killed/handicapped and no life insurance etc. etc.. But either way I am not trying to talk anyone out of using their HELOC to buy a supercar, lol feel free if you think it's a great idea. It's just not something that I would recommend to anyone. Like I said, I am the most financially irresponsible person I know and I think doing that shit is even beyond me. Haha.

[Khyron]

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Technically only if you bought equities that pay dividends. Or did that rule change?

It specifically says for the purpose of generating income. So ZPR/XPF which you want in unregistered accounts anyway, or VCN, VUN, VBAL whatever. Even REITs should be fine. Just not all in spec growth crap. (Edit just to be clear has to be unregistered account can't write off interest if it's in a TFSA/RSP/RESP)