Is there a book you would recommend that covers the pros & cons of sole proprietor/ partnership versus incorporation or holding companies?david ingram replies:
My wife bought a new home but kept our old home to rent out. We are now planning on buying additional rental properties and want to set-up a company for this. I am not expecting significant annual net profits so my main concern is minimizing the tax on capital gains in the long term. Also, our original rental property has now tripled but I don’t want to trigger a capital gain by transferring it to the company.
Any help or guidance to reference material would be greatly appreciated.
Thanks.
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I would not likely recommend a corporation for the holding of your rental property. I also accept that most accountants would likely recommend one.
If I wanted to double my cash flow in one year, all I woul dhave to do is tell 150 of my clients to incorporate.
In my opinion most people should not be incorporated because they lose control of their money.
I do not know of any book that deals with the question in any great detail either.
go to www.centa.com and read the November 2001 Newsletter in the top left hand box. This newsletter deals with making your Canadian mortgage interest on the family home deductible
The following was given out at a free seminar i had on the subject on August 12th.
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My question is: Canadian-specific
QUESTION: We have a rental property generating regular rental income and got enough equity to cover our outstanding principle residence's mortgage. Is there a way we can move this equity to pay off the principle residence's mortgage and still be able to legitimately claim interest payable as tax deductible?
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david ingram replies:
Had 91 people at a free seminar at the Holliday INN on Sunday August 12th.
The following is the handout at that seminar.
Hope it helps.
We recently bought a 4plex in Kitimat as a rental investment. We used a Scotia home equity loan for the down payment and a TD mortgage for the other 75%. We have a mortgage on our principal residence in Langley of $244,000. Our monthly payments on the 4plex will total about $1,300 , and the rents will be about $2,000. What would be the smartest method for paying this mortgage? What do we do with the excess cash flow? Is it possible to deduct the interest on our primary residence mortgage? Thanks. Al Wood. 604-530-3430.
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david ingram replies:
I had some 90 people at a free seminar on this subject today and am just about all "free"ed up on the subject.
You should be taking the rent you receive and use it to reduce the non-deductible mortgage on you r Langley house.
You can find out more by reading my November 2001 Newsletter in teh top left hand box at www.centa.com.
Reading Fraser Smith's Book 'THE SMITH MANOUVRE' will also give you ideas on how to make the Langley Morgage deductible.
Your excess flow should be used to reduce the $244,000 mortgage as soon as possible. Of course, the interest on the down payment loan is also dedcutible on Form T776.
The following is part of the handout at today's seminar -
