I`ve heard of people putting down 15% of purchase price for rental property in alberta and not having to put up any personal gaurantee or credit check.? is this true?
I`d like to purchase a small condo/office space and in turn lease it to my own company to benfit from tax deductions.
It is an L.L.C. recently open less than 6 months(ie we do not have any significant credit/income with the business) there is about 100K in cash Equity Account and I can Put 15 to 20% down payment for the property which is around $160,000 .
I will only need this space for about a year and can easily carry the mortgage
I would like different opinions on the best way to go about this.
QUOTE (d2tradingltd @ Feb 1 2010, 12:31 PM) Hello,
I`ve heard of people putting down 15% of purchase price for rental property in alberta and not having to put up any personal gaurantee or credit check.? is this true?
No it`s not. You will have to personally guarantee every loan your company takes unless you have excellent business credit and a relationship with the bank you are borrowing from.
You can put as little as 5% down on an investment property or an owner occupied property but you will have to qualify.
I`m not an accountant but I believe your business can receive some tax benefits from using an exclusive office... but these wouldn`t really be all that different than if you had a home office as the deduction moves up to fall in line with your higher expenses with the new place.
QUOTE (RedlineBrett @ Feb 1 2010, 03:17 PM) No it`s not. You will have to personally guarantee every loan your company takes unless you have excellent business credit and a relationship with the bank you are borrowing from.
You can put as little as 5% down on an investment property or an owner occupied property but you will have to qualify.
I`m not an accountant but I believe your business can receive some tax benefits from using an exclusive office... but these wouldn`t really be all that different than if you had a home office as the deduction moves up to fall in line with your higher expenses with the new place.
I am not an accountant either. But consider this: When you pay rent from your company to you in person then
1 Your company can deduct the rent as a business expense at it`s corporate tax rate. If you run a small business in Alberta that may be as little as a tax deduction of 11% of the rent (small business tax rate - I am not sure about the actual rate but it is low).
2 You have to pay income tax on your net rental income in many cases. So what is your personal tax rate? 38%?
Guess you may end up paying more tax than if you kept everything in the company. I would do a thorough analysis of all expenses and income before making the jump.
QUOTE (d2tradingltd @ Feb 1 2010, 12:31 PM) I`ve heard of people putting down 15% of purchase price for rental property in alberta and not having to put up any personal gaurantee or credit check.? is this true?
this is true if held personally UP TO 80% loan-to-value (or 20% or more down)
Not true if commercial liek office (or retail or industrial property), or less than 20% down or held in a company !
