Rental House might have been in company name and now a personal residence.

Hi,..My question is:   I had a sales business in BC for many 1999 I bought a rental house in Alberta that my accountant put into my company...even though everything to do with the house is in my personal name....line of credit, etc....I quit working for the company that I was sales rep for in 2004.....hence, I moved from BC into my rental house in Alberta in June of 2005.....My company only has a shareholder loan due to me and this rental property which I am currently living in .....I want to close my company....This rental house has become my personal residence as of June 2005.....Can you please advise as to the procedure for closing my company & the removal of this rental house from the company books to my personal residence as of June 2005 & can this be done retroactive?   Your help is appreciated.   Thank you. -------------------------------------------------
david ingram replies:

This is a very late reply and was picked randomly out of about 700 unanswered emails.

Your question points out one of the best reasons to "not" put  a house into a corporation.

It seems to me that the house was not in the company from your question.  The compny may have been handling the paperwork for the rental; but your accountant could not put a house you bought into the company.  The lawyer or notary would have registered it in the comapny name in the first place. If you bought it with a line of credit in your name and it was registered in your name, than it is likely yours already and the error was putting any of the rentals through the company.

It could also be that the company was holding it for you. 

A lot depends upon whether you have already filed the corporate 2005 and 2006 tax returns.  If you have not, you should investigate the possibility that the house was not in the company name OR if it was, maybe the company was only holding it in trust for you. 

The other problem is that when you moved into the rental house in 2005, you triggered a capital gain if it was in your name.  If it was in your name and you never claimed CCA (depreciation) you could have filed an election under Sectin 45(3) to delay paying the tax on the capital gain from the price you paid for it and the deemed sale when you moved in.  Technically, you are too late to file that election.  However, the CRA has been known to acept a late filed exemption form.

If you did claim CCA, and it was in your name, you owe tax on the recaptured CCA and the capital gains with your 2005  tax return.

If it 'was' in the company name, you owe tax on the personal benefit bestowed on you by the company since you moved in. �