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Detention of a building (part 2)

Detention of  a building (part 2)



Whether the building is personally held, by a company or a trust, the interests paid on a loan in order to finance the building will be deductible in the calculation of the net income of the taxpayer.


An observation which can be made when the building generates income of goods is that it seems preferable to hold a building in a personal way than through a corporation since there is no tax postponement possible via the company, on the contrary, there is an under-integration.


On the other hand, this premise can be proven false, if the company which acquires the building is already set up and if there are surplus liquidities in the company, then that allows a financing of the building before taxes.


Moreover, another way of financing a building before taxes is that the company which holds the building is also holder of the stock of an operating company, whose financing could be done by payment of dividends and this without fiscal consequences.








A personal detention of a building will involve the realization of a profit or a loss of capital at the time of the provision. The loss of capital will be acceptable only on the portion of the ground.


A company which owns a building will carry out a profit or a loss of capital, the loss of capital will be acceptable only on the portion of the ground. Thereafter the liquidities could be paid to the shareholders as well as the account of the capital dividend (if there is realization of a capital gain) and by way of dividends.


Moreover, realization of a gain or a loss of capital at the time of the provision of a building, this one can involve a recovery of ACC or a final loss.




At the time of the death of the owner who holds a building personally, there will be a provision supposed to be the right commercial value of the building thus involving the realization of a capital gain except if the building is bequeathed to the spouse, then it will not have immediate fiscal consequences.


A building held in a company, will not involve a supposed provision of the building at the time of the death of the shareholder of the company, but rather a supposed provision of its actions at the right commercial value.


Since a trust company does not die, there cannot be fiscal consequences; on the other hand there will be a supposed provision of all the goods of the trust to the right commercial value at every 21 years. On the other hand, certain fiscal plannings are possible in order to reduce the fiscal consequences of the supposed provision of the credits.




It should be noted that acquisition or the provision can involve implications on the level of the transfer rights and excise duties (TPS - TVQ), these elements are quite important to analyze in order to avoid harmful consequences.


In the choice of the mode of detention, a factor which can be taken into account is the fact that the personal liability for the purchaser can be committed or not.


The acquisition of a building offers to the investors several possibilities so that in the mode of detention, each one comprises its advantages and disadvantages. A suitable decision will depend on the objectives of the investor as well as his fiscal and financial profile.

About the author

CA Robert Parent

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