My question is: Canadian-specific
QUESTION: My husband and I are planning to buy houses, renovate them and
sell them ASAP. We will create a company for this purpose. Currently we own
6 apartments, titled in both of our names that we will not be selling in the
near future. Is there any advantage in transferring our assests to the new
company? What are the tax implicatons?
Thank you.
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Mt advice would be that you do not put the existing six units in a
corporation at this time. - When you start the renovation business as a
corporation, everyone you deal with will want personal guarantees. You will
not get any protection from personal liability for the first three or four
years and if you lose money (fifty-fifty), you will not get any tax
deduction at the start.
I suggest you start as a partnership.
GO TO www.centa.com, click on newsletters in the top left box and click on
2001 and click on November to read about how this business venture can be
used to make the mortgage on your own home deductible if it is not
deductible now.
The following question and answer from the past deals with the taxation on
the renovator renovation business.
----------------
My question is: Canadian-specific
QUESTION: Hello,
I've recently been very interested in the idea of partnering with my family
and buying, fixing up and then reselling homes. It looks like this works
great in the US, however, after mentioning this idea to a realtor here in
the Lower Mainland im not so sure.
What type of tax implications are there for doing something like this? Does
this actually turn out to be a good way to make a profit?
Thanks,
Dxxxxxxx
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david ingram replies:
If you buy property with the "right" things wrong, being a renovator can be
extremely rewarding and profitable.
By the right things wrong, I mean cosmetic items that can be cleaned up and
put right.
cleaning up the yard
replacing light fixtures and painting
maybe a new counter top but not all new cabinets.
NOTHING STRUCTURAL.
However most newcomers and amateurs end up buying a building with structural
problems or they decide to do a kitchen and end up with a nightmare of
expensive rewiring, re plumbing, dry rot and maybe a crumbling foundation.
It is NOT a job for amateurs.
Because it is a BUSINESS, any profits are taxable at regular tax rates in
the US and / or Canada.
Good Luck.
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, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' 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 <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
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