Businesses for Tax purposes

[Hehe]

Originally Posted by highfive

Feel free to correct me but from my understanding, renting out under a company is not as easy.

It's no different than renting it out yourself. A company is considered as a single entity under tax/legal system. Just as any person is a single entity.

1. Depends on how much you earn from the house. If you're renting out for $1500-2000 a month, you annual revenue is what? $24,000? Incorporating it, and paying all the annual report fees, hiring an accountant to do year end and all, it may not be worth it being so little money.

True

2. If the house is under the company and you're trying to get any sort of mortgage or financing, I believe it'll fall into commercial banking and it'll be a different way of going through the bank. I heard it's a lot tougher.

It depends. But usually if you would guarantee it personally, bank don't treat it any differently. But the rate is often higher though.

3. There is a plus with having a company. Corporate tax rate is 13%. But if your rental income is not a whole lot, personal tax rate would still be better.

Yes, but unless the earning gets mainly re-invested onto something else, when it becomes dividend for the owner, the owner would have to declare it and taxed again on personal tax.

Overall speaking, unless one is planning to have multiple properties down the road and most of the rent income would be pour into the company again for further investment, I don't see much reason to create a company to cover a rental operation. Since any saving would be marginal at best.

One thing anyone can do, something that CRA has accepted it as a valid tax minimization strategy is cash damming

Cash Flow Dam

12345