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- Holding real estate property personally or in a corporation? Deciding to hold real property in a corporation depends on many factors. To begin, a corporation offers limited liability protection.
- Taxation on Transfer. The general rule under Canadian tax law is that a transfer of property between an individual and a corporation is a sale at fair market value (FMV), which can result in immediate tax on a capital gain.
- Obtaining Creditor Approval for the Transfer of a Mortgage to the Corporation. Often, creditors will allow a transfer of real estate property. However, permission should be received before the transfer and may entail prepayment penalties depending on the agreement with the creditors.
- Mutations Tax, Also Known as Land Transfer Tax. Mutations tax generally applies when there is a change in legal ownership of a property between unrelated persons.
- Overview
- Sole proprietorship
- Partnership
- Corporation
- Forms and publications
- Related links
You may find yourself in a situation where you would like to transfer personal assets to your business.
The rules differ for each type of business structure.
For income tax purposes, you have to transfer personal property to a sole proprietorship at its fair market value (FMV).
The FMV of the assets is the opening undepreciated capital cost (UCC).
For income tax purposes, you can transfer your personal property to a Canadian partnership for an elected amount.
This amount may be different from the FMV, as long as you meet certain conditions. The elected amount then becomes your proceeds for the property transferred, as well as the cost of the property to the partnership. For more information on transfers of property, go to Interpretation Bulletin IT-413, Election by Members of a Partnership Under Subsection 97(2).
For income tax purposes, you can transfer personal property to a Canadian corporation for an elected amount.
This amount may be different from the FMV, as long as you meet certain conditions. For more information, go to Interpretation Bulletin IT-291, Transfer of Property to a Corporation under Subsection 85(1), or Information Circular IC76-19, Transfer of Property to a Corporation under Section 85.
•Guide RC4022, General Information for GST/HST Registrants
•Guide T4012, T2 Corporation – Income Tax Guide
•Canada Business Network
•Checklist for Small Businesses
•Innovation, Science and Economic Development Canada
•Related provincial and territorial government sites
- Before doing anything. Before transferring any property, consider whether the real estate should actually be in a corporation. A host of reasons exist for holding properties corporately including tax, legal, financing, business, estate, succession or legacy planning.
- Before you close…if you have that advantage. If you’re in the fortunate situation of having yet to close on a property, despite having already made your offer, you do have some more flexibility with the ownership.
- Trust agreements. If you find it challenging to change the purchase and sale agreements to a corporation and still get the deal to close, it may also be possible to use a trust agreement.
- Costs upon transfer. What is this going to cost? The first three to consider are: Transferring a property to a corporation results in a disposition. From a tax perspective, this means that if the property has appreciated in value since it was acquired, you will be taxed on the capital gains.
Jan 17, 2024 · Complete Land Transfer Tax Forms: In Ontario, the transfer of property is subject to land transfer tax. Complete the required land transfer tax forms and submit them to the Ontario Ministry of Finance. Execute the Transfer: Once all legal requirements are met, execute the transfer agreement. This involves signing the agreement and registering ...
Sep 7, 2023 · Land transfer tax. Depending on where your real estate property is located, a transfer from personal to corporate ownership may attract land transfer tax. It is important to determine whether this applies to your situation and if yes, the expected amount of tax owing on transfer.
If one of the owners dies, the title forms part of the deceased person’s estate as per the instructions of the will or intestacy. The minimum mineral fraction is 1/20 per commodity per parcel. When companies hold title as Tenants in Common, they are governed under the Business Corporation Act, which can be referenced for further details.
People also ask
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May 7, 2024 · Get the current deed. To transfer the property, you need the legal description of the property.You can find this information on the current deed. If you don’t have a copy of the deed in your possession, you should go to the Recorder of Deeds office in your county and get a copy.
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