protecting my investment.

[Deeker]

should i start a business to hold my investment property to protect my personal assets if i were to ever get sued?

 

[Martin1968]

What does your investment property consist of? Is it a large apartment building? Or is it just a single family or smaller multifamily?
I can't really see any benefit for the smaller real estate investor to incorporate. Not even from a possible liability issue. Have good legal leases in place, have good insurance (liability coverage) in place and upkeep your property to the best and safest standards.

 

[Deeker]

thank you Martin1968,
my investment property is a single family home.
Is there any advantages to incorporate as far as tax deductions are considered, i will be adding more investment properties to my portfolio in the future.

 

[Martin1968]

No there really isn't when it comes to deductions, as they are the same.
I would advise to talk to your accountant on what tax rates would look like simply because it would depend on what your annual income is, and if rental properties are in just your name or maybe your partner as well for rental income split. Accountant can do a better job on explaining then I can.
But my wife and I have 17 doors and still not incorporated. Talked with many and the overall consensus is that it's not necessary.
One thing that is often overlooked tho is when incorporated on just a few small props that don't show a ton of income for the corperation, banks will be reluctant to have that corperation qualify for a loan, however when you both work and have a good income it opens doors easier.

That's just our experience. Others might have different things to say.
Cheers
Martin

 

[Thomas Beyer]

Don't incorporate unless you have to for SFHs. Tougher to get mortgages and you will sign a personal guarantee anyway.

Only if you buy larger commercial assets or deal in risky assets like buying contaminated land, gas stations or loan money would I incorporate.

If there is a lawsuit directors often get sued too anyway. As such, as a couple do not have husband and wife as a director even if shares are held by both.

 

[Deeker]

Thank you Martin!!
Happy investing..

 

[Deeker]

Don't incorporate unless you have too for SFHs. Tougher to get mortgages and you will sign a personal guarantee anyway.

Only if you buy larger commercial assets or deal in risky assets like buying contaminated land, gas stations or loan money would I incorporate.

If there is a lawsuit directors often get sued too anyway.

excellent advise Thomas.
Thank you.

 

[Thomas Beyer]

As a couple do not have husband and wife as a director even if shares are held by both.

 

[Deeker]

Hi Thomas,

what do you mean not to have me or my wife as a director. can you elaborate?

 

[Thomas Beyer]

Directors have liability for a "limited" liability corporation: GST, payroll taxes & litigation targets. Mere shareholders do not.

 

[dpeacock]

Also, in Alberta, isn't it true that if for some reason a bank foreclosed on your property, if held personally, your liability is limited to the proceeds of the sale of the property. Even if those proceeds were less than the amount owed? Understanding that your credit rating would also take a hit.

 

[Tina Myrvang]

Check with your accountant. Below is a post done by George Dube of BDO on Incorporating.

http://georgeedube.com/2010/07/23/t...nership-strategies-for-real-estate-investors/

 

[Thomas Beyer]

Yes credit rating would be impacted. Not a recommended strategy.