Transfer Mortgage to Company

[brianl]

I just founded one company and hope to transfer my properties to the new company, currently mortgage and title of the properties are under my name. I asked my lawyer and accountant, they said it is doable. I`m in Alberta. However I heard that since last year assumble mortgages are not allowed by most of the banks here. Could anyone give any directions of this? Thank you for the help

 

[MikeMcCrae]

You would have to read your mortgage documents to find out what the rules are. But they will most likely be assumable with qualification and they would want personal guarantees from you. Transfering from personal to company can be done but it triggers tax unless you spend a lot of money on accountant and lawyers to do the proper role over. Unless there is a very compelling reason to move them to your company there is ussualy little gain in my experience.

 

[GarthChapman]

You can make the transfer without a tax implication if you can show you were holding the property in trust for your corporation all along. But watch out when it is time to renew - your lender may want company financials and a personal guarantee, and, as Mike says above, they may at time of the transfer want a personal guarantee.

So why not just do up Trust Agreements for all your properties, defining that you are holding the properties in trust for your company. You may need to demonstrate that you bought them with this intent, in advance of incorporating the company. Talk to your Tax Accountant about this no cost no hassle method.

I have a sample Trust Agreement I could email you if you need one, or maybe I could post it here somewhere. Email me at my address below if you want it.

 

[brianl]

Thank you Mike and Garth for the help. My intension to transfer to company is to give me the ability to buy properties, currently the mortgages are under my name, and I wouldn`t be able to purchase more properties. If the bank want me to be the guarantees for the company, will my name be on the mortgage and land title or will the mortgage still shown on my credit bureau report? Another reason of the transfer is that I wouldn`t like to have any liability if something bad happens to the tenant or the property. Your help is much appreciated.

 

[PeterKinchMortgageTeam]

QUOTE (brianl @ Nov 19 2008, 01:43 PM) I just founded one company and hope to transfer my properties to the new company, currently mortgage and title of the properties are under my name. I asked my lawyer and accountant, they said it is doable. I`m in Alberta. However I heard that since last year assumble mortgages are not allowed by most of the banks here. Could anyone give any directions of this? Thank you for the help


Keep in mind as well, that transferring them into your company name may make it more difficult to refinance them in the future and will limit the products you have access to (ie HELOC seconds).....