Joint Venture Investor - My Corporation?

[UTCVenturesLtd]

It is so hard to find a joint venture investor, i use my corporation to be that somebody!

Strategy: I have a personal investment property that has doubled in value. The property is paid off.

Transaction Question: Can i lend my corporation 50% of the equity in the property and either do it via a joint venture agreement and or put the corporation on the title as well before selling it? The property gets sold, profits split and money returned to me. We both are then taxed on a smaller amount of profit. It that an okay investment strategy or bordering on tax evasion?

 

[jseib]

We looked into something vaguely simular to this a few years ago and admittedly my memory is a little flaky on the issue but theirs 2 major problems with the idea..

1) You own the corporation so it`s not an arms length transaction... Meaning it would be looked on as tax evasion.

2)The corporation is a separate entity, you can`t lend it half of a property anymore then you could lend a person half of your property... The corporation would have to go on title which requires a sale or gifting both of which are taxable...

So you would pay taxes, lawyers, land transfer etc to sell it to your corporation, then pay the same processing fees again when selling it to the end user...

I don`t see how you could come out ahead...

Why not just refinance the property and use it to buy shares (or issue a loan) in/to the corporation, the corporation then takes that money and buys something else with it, pays you back via dividends or principal and interest payments... No sale is triggered, you get the money out for productive use and no real fancy accounting..