Road block for my first rental property

[SylvJ]

Hi. I'm looking at investing in properties but I can't decide on the way I should finance the downpayment.

The available money in presently in my LTD company. I would prefer to avoid starting Hold Co and all the cost associated with accounting, etc. But going personal means a very high tax bill which would take years to recover (approx $30 000) :-(. I can't see any other way out but maybe one of you do? This is a great site for info so I'm throwing this question at the pros.



Cheers.



Sylv

 

[Sherilynn]

Your company could possibly give you a shareholder loan, but that must be repaid within a reasonable time or it will be considered to be a distribution and will be taxable as personal income. It could be worth posing the question to your accountant, especially regarding the repayment timeline.

 

[SylvJ]

Thanks Sherilynn,



I am aware of the possibility of getting a loan from the LTD co but paying it back within a short time frame would be difficult. My accountant did mention this option. I need to opt for the least cost impact in the long term`..



I'm reading that there are more benefits to have the properties under personal so I'm trying to find a way to avoid opening up a holding co`. But I may not have the choice.



Thanks again!



Sylv

 

[Sherilynn]

There are also benefits to having property in a corporation. Estate and tax planning and asset protection are a few of the most important, especially if you are in a high tax bracket. Beginner investors who plan to buy several properties in a short time frame sometimes find that incorporation makes sense from day one. For others, it never makes perfect sense to incorporate.



You may want to talk to an accountant who specializes in real estate investment.