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This is a great forum and I'm new to this site and the world of real etate investments. Hopefully someone can answer the questions that I have.
I currently own 3 properties in my personal name. I recently set up a corportation and purchased my fourth under the business. My question is can my corporation assume all the revenue and expenses from the properties owned personally and file a corporate tax return for them without switching the title or deed over to the corporation. These properties are all long term rentals.
 

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This is a great forum and I'm new to this site and the world of real etate investments. Hopefully someone can answer the questions that I have.
I currently own 3 properties in my personal name. I recently set up a corportation and purchased my fourth under the business. My question is can my corporation assume all the revenue and expenses from the properties owned personally and file a corporate tax return for them without switching the title or deed over to the corporation. These properties are all long term rentals.
I am not an accountant, so take what I say with a grain of salt.:) The corporation, even if you own it completely, is a separate legal entity from you. Therefore, tranferring title results in a deemed disposition.

I suspect what you want is to transfer the rents from the other three properties to benefit from the lower small business tax rate. I have heard of situations in which corporations owned by an individual charged a management fee. You charge yourself, through your corporation, a fee equal to rents received to manage the other three properties.

Obviously, you want to consult a professional. The advice you get on a site like this is often worth what you pay for it.
 

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Check with an accountant, but I'm pretty sure you would have to have title transferred to the corporation and this would result in a deemed disposition to you personally. Depending on your overall goals (i.e. succession planning) this could still be advantageous in the long run.

I use to know an accountant who had commercial real estate investments (laundry mats and small strip plazas) and he wanted to benefit from corporate tax rates but not trigger a deemed disposition of the personal assets, so he set up a corporation to be the property management arm of his operation and he had the corporation bill the properties for property management services thus transferring some of the income to the corporation.

I don't know how well this worked out for him, or for how long.

If you find a way to accomplish your goal without transferring title, please post it and let the rest of us know.
 

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Even if title WAS transferred, nothing would be accomplished because the tax rates on active income don't apply to investment income or property income. RevCda does NOT want you hiding those incomes behind preferential tax rates. The corp already started will be taxed at the high rates.

Billing management fees would seem to be active business income - it's years since I did a corp tax return. But remember that cash is now behind firewalls. You cannot use it personally without being taxed personally at the rate that exactly equals the original tax savings. What are you going to do with the cash?

Invest it? That in its turn would not qualify for active business rates.
 

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Even if title WAS transferred, nothing would be accomplished because the tax rates on active income don't apply to investment income or property income. RevCda does NOT want you hiding those incomes behind preferential tax rates. The corp already started will be taxed at the high rates.

Billing management fees would seem to be active business income - it's years since I did a corp tax return. But remember that cash is now behind firewalls. You cannot use it personally without being taxed personally at the rate that exactly equals the original tax savings. What are you going to do with the cash?

Invest it? That in its turn would not qualify for active business rates.
I know of one individual who did something similar. He was audited by CCRA but was not reassessed. The money would be in a separate legal entity. If the OP were worried about personal legal libility, the corporation may offer an advantage.
 
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