Should you buy real estate through a corporation? Sep 13th

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One of the main tax benefits of Canadian real estate is the ability to claim an unlimited principal residence exemption on the property value appreciation. One exception may be if the land is more than half a hectare (1.24 acres), unless the minimum municipal lot size at the time you purchased the property was more than that or you can demonstrate the need for the larger lot size to use and enjoy your home.

Another exception is if a property is owned by a corporation. A corporation is a company that is incorporated and owned by shareholders. It is a common way to do business in Canada, and it is a separate legal entity from the shareholders. Corporations file their own tax returns.

Can a corporation buy a house in Canada?

A corporation can be used to buy your home or a secondary property, such as a vacation property, but there are drawbacks. For one, you must personally pay the corporation fair market rent each year for the property or include the equivalent amount as a taxable benefit on a T4 slip to be reported on your personal tax return as income…

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