My question is: Canadian-specific QUESTION: Hi David, I currently own a rental property and am in the process of purchasing another under mine and my wifes names. My income tax bracket is approx 30% with the wages form my job, excluding the rental income. Does it make sense to start a number company for any tax advantages, or is it not worth while at this pint? At what point does it make sense to start a company on paper only? Thanks for your help. Frank --------------------------------------------------------------------------- david ingram replies: Forget about the incorporation. No tax advantage and a whole lot more accounting and legal costs. My opinion is that it does not make sense to have a corporation for rental property unless you have a full time employee who is running it or making major decisions. At that point a corporation does protect you a bit from lawsuits which might arise from your employee's actions. Otherwise as an officer and director of a corporation, you are (or can be found) personally responsible for law suits against the company because you are the "driver". Think of it this way. Your corporation has not got a lot of money but owns a car that you drive. You hit an important person with your car and make him a quadriplegic. He sues and wins $5,000,000 and your insurance is only good for $1,000,000 or $2,000,000. At this point, they will go after the company's assets and then when that does not cover the amount, they will go after the assets of you, the driver. As the manager of your corporation, you are the driver. What you do have to make sure is that the mortgage on your own home is tax deductible. For instance, BEFORE you buy the next property, pay down teh existing non-deductible mortgage by whatever amount you have that you were going to use as a down payment on the next property. Then, use your increase equity on the house to borrow whatever you need for a down payment by using the house as a down payment. GOTO www.centa.com, click on newsletters in the top left box and then read the November 2001 edition to find out tips on how to make your mortgage deductible. Use Joan Marsh (604) 535-9981 or Glen Kelleway at 476-0053. They are both mortgage brokers who can help make your mortgage interest deductible. ==================================== Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600. Old shows are archived at the site. AND THERE is a FREE SEMINAR Fred Snyder and I are giving free seminars on making your CANADIAN mortgage interest tax deductible at our new office at 1764 West 7th Vancouver. This is in the Spence Diamond Building at the corner of 7th and Burrard and is very easy to find. When: Just about " Every" Thursday Night Time: 7 to 9 PM RSVP: phone (604) 731-8900 to reserve (limited to 15 people) My time is still spent at 4466 Prospect Road North Vancouver, BC (604) 980-0321 david ingram This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate: multi jurisdictional cross and trans border expatriate gambling refunds for the United States, Canada Mexico Great Britain the United Kingdom, Kuwait, Dubai, Saudi Arabia, South Africa, Thailand, Indonesia, Egypt, Antarctica, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican and any of the 43 states with state tax returns, etc. income tax wizard wizzard guru advisor advisors experts specialist specialists consultants taxmen taxman tax woman planner planning preparer of Alaska, Alabama, Arkansas, Arizona, California Denver Colorado, Connecticut, Delaware District of Columbia Miami Florida, Garland Georgia, Honolulu Hawaii, Idaho, Illinois, Indiana Des Moines Iowa Kansas Kentucky, Louisiana Bangor Maine Maryland Boston, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico,New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon. Paris, Rome, Sydney, Australia Hilton Pennsylvania, Rhode Island, Rockwall, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec City, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland, Yukon and Northwest and Nunavit Territories, Mount Vernon, Eumenclaw, Coos Bay and Dallas Houston Rockwall Garland Texas Taxman and Tax Guru and wizzard wizard - David Ingram's US/Canada Services US/Canada/Mexico Tax Immigration & working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Calls accepted from 10 AM to 10 PM 7 days a week Res (604) 980-3578 Cell (604) 657-8451 Bus (604) 980-0321 davidingram at shaw.ca www.centa.com www.david-ingram.com Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included." ============================================ -------------- next part -------------- An HTML attachment was scrubbed... URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/20040807/44801cf1/attachment-0001.htm
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