QUESTION: I am a professional who has a professional corporation. I am interested in investing in real estate, and I need to make a downpayment on a house. Can I borrow money from my professional corporation? If yes, for how long, and do I have to pay interest? Who sets up such a loan? Thank you.
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david ingram replies:
If you are talking about a rental house or rental property, borrowing from your corporation is fine.
If you are talking about buying a house for you to live in, you should dissolve your corporation or put it aside for a few years and operate as a proprietorship so that you can make all your mortgage interest deductible.
Goto www.centa.com and read the Nov 2001 newsletter in the top left hand box and get hold of Fraser Smith's "the Smith Manoeuvre" and attend one of Fred Snyder's free seminars on the subject (604) 731-8900 for more information.
