Four reasons to incorporate for smaller residential properties:
1) limited liability, unless personal guarantee is required for mortgage
2)
income can be paid different ways, such as dividends to various people
(kids, spouse, self) or management fees to various people
3) JV
partner can be brought on board without having him/her on mortgage and
to protect them from a disaster, via shares and/or shareholder loans
4) different shares % and shares classes allow for elegant profit splitting and separation of "control" from "profit sharing"
Four reasons NOT to incorporate for smaller residential properties:
1)
It is slightly more difficult to get a mortgage, as not all banks hand out
residential mortgages to small properties held in a corporations
2)
you will have to sign a personal guarantee .. so in Alberta, for
example, you will be personally liable for a mortgage default if in a
corporation, whereas a personally held non-insured mortgage will have
recourse ONLY against the property, but not you personally ! This is an
Alberta advantage that does not, to my knowledge, exist in other
provinces !!
3) annual filing and accounting costs .. probably about $1000 to $2000 or more PER YEAR .. depending on complexity
4) no flow through of losses to shareholders (if this is required or desired, use an LP)
Suggestion from your input in your post above:
I'd open a new company as opposed to holding them personally.
Corporations allow you to buy and sell shares, advance or repay loans, and pay dividends to family members. There is also, as the name implies, limited liability. It is easier to change the ownership structure, say from 50/50 to 40/60 to 30/70 is parties agree to it and sell shares at agreed prices in case one wants partially out or needs money compared to the other party. You can also add JV partners later if desired.
In a corporation voting shareholders vote for directors. Directors appoint management.
In a 50/50 arrangement a shotgun clause is recommended. Better is if you have the majority of shares as it is clear who makes the ultimate decision.