This interesting question deserves particular attention in regard to the fiscal and legal dimension. And firstly, when?
It is desirable to consider incorporation when rental income is much higher than deductible expenditure. Indeed, the tax rate in incorporation when rental income is much higher than deductible expenditure. Indeed, the tax rate in incorporation is 19% for the first netto income bracket, while for a private individual having other sources of income, his marginal imposition could quickly exceed 38% (as of 40.750 $ of income) that is to say 2 times more taxation. The answer thus appears simple. However, if the owner must withdraw sums from his Company, he will pay taxes and this according to the principle of integration. The owner would then not derive a tax advantage while incorporating himself if one adds the expenses of incorporation of the departure and the annual accountable expenses of 1.500 $ to 2.000 $. Thus, to consider incorporation, many think to have real-estate netto incomes of at least 50.000 $ per annum.
Other important points:
The number of buildings, the number of residences, protection against the creditors, the professional responsibilities are also important criteria to consider with the exemption of the capital gain of 750.000 $ (by respecting the conditions) on the actions of a Company at the time of its resale.
Meanwhile, at the time of resale of the building, in an incorporation dedicated to the real estate, it will be necessary to distinguish well between capital gain and incomes of Companies, which fiscally will not be treated in the same way as the private individual.
Louis Robert, Taxation Expert
Centre Carrefour Financier
Tel.: (514) 396-7788