- Joined
- Aug 30, 2007
- Messages
- 13,879
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 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"
Three reasons NOT to incorporate for smaller residential properties:
1)
It is 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 $2000 to $3000 or more PER YEAR .. depending on complexity
1) limited liability, unless personal guarantee is required for mortgage
2) income can be paid different ways, such as dividends 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"
Three reasons NOT to incorporate for smaller residential properties:
1)
It is 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 $2000 to $3000 or more PER YEAR .. depending on complexity