Joined
·
2,054 Posts
Does anyone have experience buying the holding company that owns a building?
Any caveats?
Any info much appreciated.
Any caveats?
Any info much appreciated.
Buying the company that holds the RE
1 - 5 of 5 Posts
It is a lot riskier to buy an ltd than the assets directly. You will be liable for any undisclosed, unforseen liabilities of that ltd.
Much better to set up your own ltd (although I don't think this is a good way to hold RE) and have your ltd buy the asset from the other ltd.
Much better to set up your own ltd (although I don't think this is a good way to hold RE) and have your ltd buy the asset from the other ltd.
Not sure of the answer but something to look into..
If you buy the company you may be allowing the previous owner avoid the capital gains on the property.
What about capital depreciation? If the previous owner has depreciated the building this may need to be paid back when you want to sell the building.
If you buy the company you may be allowing the previous owner avoid the capital gains on the property.
What about capital depreciation? If the previous owner has depreciated the building this may need to be paid back when you want to sell the building.
Joined
·
2,054 Posts
Why don't you think this is a good way to hold RE?
Why do you think it is riskier to buy the corporation than the asset only?
Buying the corporation also avoids land transfer. It also reduces the peurchase price by the depreciation of the asset.
A lot less down payment is required if you buy the corporation and assume the mortgage then if you buy the asset outright.
Let me draw out the two scenarios in more detail for you.
Buy corporation with $100,000 plus closing costs which just include share transfer costs and legal costs Current deferred taxes and depreciation are $200,000
Mortgage of 1,800,000 at either 3.5 % for 5 years or 4.75% for 10 years.
Mortgage payment is 10,000 or 8,000
After all expenses cash flow is either $6000 or $8000 depending on which mortgage you choose.
If you buy the asset outright. You must put down the $300,000. The other costs remain identical except for you must also pay land transfer fees.
Why do you think it is riskier to buy the corporation than the asset only?
Buying the corporation also avoids land transfer. It also reduces the peurchase price by the depreciation of the asset.
A lot less down payment is required if you buy the corporation and assume the mortgage then if you buy the asset outright.
Let me draw out the two scenarios in more detail for you.
Buy corporation with $100,000 plus closing costs which just include share transfer costs and legal costs Current deferred taxes and depreciation are $200,000
Mortgage of 1,800,000 at either 3.5 % for 5 years or 4.75% for 10 years.
Mortgage payment is 10,000 or 8,000
After all expenses cash flow is either $6000 or $8000 depending on which mortgage you choose.
If you buy the asset outright. You must put down the $300,000. The other costs remain identical except for you must also pay land transfer fees.
You chose to ignore my answer to your question so please, please go to someone whose advice you respect and get answers to the following questions.
Do the values on a company's Balance Sheet determine the price of the company's shares?
What does (accumulated) depreciation measure and how does it impact the value of the company?
What does the DfdTax measure and when will it be paid/received?
What is the income tax imposed on Ltds that hold realestate?
Will a lender give me a loan to buy ppty held within an Ltd?
Was Leslie correct about the undisclosed liability?
Do the values on a company's Balance Sheet determine the price of the company's shares?
What does (accumulated) depreciation measure and how does it impact the value of the company?
What does the DfdTax measure and when will it be paid/received?
What is the income tax imposed on Ltds that hold realestate?
Will a lender give me a loan to buy ppty held within an Ltd?
Was Leslie correct about the undisclosed liability?
1 - 5 of 5 Posts
