Lake Okanagan Realty

The answer to this question is usually tax driven and therefore you should obtain accounting advice. There can be drawbacks to purchasing in the name of a company in Whistler including the following:

• Corporations may pay tax on income received from the property at significantly higher rates than individuals (depending on the individuals marginal tax rates)
• Corporations can pay higher capital gains tax as well
• Should you incorporate a company specifically for the purposes of acquiring a property you will have the additional legal cost of incorporating the company of approximately $1,000 plus additional costs associated with maintaining the company annually such as filing annual reports, registered and records office charges and accounting charges
• If the Company is to be incorporated in British Columbia than a majority of the Directors of the Company must be residents of Canada and at least one Director must be a resident of British Columbia
• If the Company is from a jurisdiction outside of British Columbia, your mortgage lender may require that the company be registered with British Columbia prior to agreeing to lend money (the cost associated with doing so would be roughly as outlined in the previous paragraph)
• In the event that the Company is not required to register within British Columbia prior to completing the transaction, a Certificate of Good Standing will be required from the incorporating jurisdiction and an Opinion Letter from a solicitor from the incorporating jurisdiction would be required in conjunction with any mortgage financing
• It will be necessary to maintain the Company in the incorporating jurisdiction as long as the property is owned
• Personal guarantees of the principals of the Company will usually be required by the mortgage lender even though the property is owned by a Company
• Losses from the property if owned by your company cannot be written off against your personal income tax

The advantages of having the property held by an incorporated entity would include the following:

• In the event of the death of the principals of the Company there would be no change of ownership of the property in the British Columbia Land Title system, and if the shares are held outside of British Columbia there would not be any probate fees in British Columbia payable in conjunction with the change of ownership of the shares
• If the only asset that the Company owns is the property, it may be possible to sell to a Purchaser the shares in the Company there by avoiding the payment of Property Transfer Tax and GST on a sale of the property (Purchasers may be reluctant to purchase shares as they would inherit any liabilities in the company including any monies owning to Canada Customs and Revenue Agency).