How to invest in preconstruction real estate

It can make sense to purchase rental or vacation properties through a corporation, but often it’s simpler—and less risky from a tax perspective—to own the real estate personally.

How to invest in preconstruction real estate

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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 the shareholders. It is a common framework in which to do business in Canada, and is a separate legal entity from the shareholders that files its own tax returns. Corporations can own real estate; however, unlike an individual, a corporation cannot claim a principal residence exemption. This can make it inefficient to use a corporation to own a home you could otherwise sell in the future tax-free

Using a corporation to buy an income property

Some people consider using a corporation to buy a rental property. If you do not already have a corporation and you are setting up a corporation solely to buy the property, it is important to consider the costs and benefits. The legal fees to establish a basic corporation may range from $1,500 to $2,500. The annual costs for legal and accounting fees may be similar or even more.

Corporations generally pay tax at about 50% on net rental income, and at about 25% on a rental property capital gain (rates differ by province). This is similar to what a top-rate taxpayer might pay if they owned the same property personally. Therefore, many people would pay less tax to own a rental property personally instead of corporately, and could also avoid the cost and complexity of the corporate structure.

One exception may be in the event someone was buying and flipping properties. If a taxpayer buys and sells a property not for the intention of renting it out, but for generating a profit on the sale, that income could be taxed as business income. As such, someone flipping a property personally could pay tax at about 50%, depending on their income and province or territory of residence. By contrast, a corporation’s business income could be taxed as low as 9% to 15% (rates differ by province).

If someone has an existing corporation with accumulated savings, using a corporation to buy an investment or business property becomes more compelling. This is because retained corporate profit can be used to buy the property without withdrawing money and incurring personal tax to buy the same property personally.

Often, business owners will establish a separate corporation to buy a rental property or a property to be used for the business. This is done so that the property is not available to creditors of the primary business or does not need to be sold along with the business if it is ever sold. Money can generally be moved from one corporation to another without triggering personal tax.

Using a corporation to buy a secondary property

A corporation can be used to buy a secondary property, such as a vacation property, but there are drawbacks. Most importantly, you must personally pay the corporation fair market rent each year for the property or include an equivalent amount as a taxable benefit on a T4 slip to be reported on your personal tax return as income. It may also be more difficult to secure the same mortgage financing compared to buying the property personally.

Some snowbirds consider using a corporation to buy a U.S. property. The goal is usually to avoid U.S. estate tax otherwise payable on death. The current U.S. estate tax exemption for Canadians is $11.58M USD, so most Canadian residents are not subject to U.S. estate tax. Canadians using a corporation for a U.S. property still have the same potential fair market rent payment or taxable benefit income inclusion issue mentioned previously. Alternate structures like cross-border trusts may be more suitable in some circumstances for high net worth purchasers exposed to US estate tax.

Canada does not levy estate tax, but probate fees or estate administration tax can be high in some provinces. Corporations may bypass probate or estate administration if owned by a shareholder who has a secondary will, but alter ego or joint partner trusts may be more effective tools to avoid probate than establishing a corporation for personal use real estate.

Personally held real estate can be transferred to a corporation after purchase, but land transfer taxes generally apply. Accrued capital gains tax may be deferred, however, on transfer.

Corporations may be suitable structures for holding real estate in some situations, but in others, the cost and complexity may not be worthwhile, or could even be detrimental. Tax and legal advice should be considered prior to property purchases.

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

Comments Cancel reply

I was living in common law relationship from last 15 years. I booked preconstruction condo in 2016 in other city. The condo is ready to occupy but my common law partner does not want to move. So i am moving and we will not be amy more in common law relationship. She will be still living in ottawa.
Can i claim my new home as my principal residence and get exempt from GSt.
How long I have to live there to claim as principal resident.
The current property is ownership is 50% each party.
How the capital gain will calculated when she sell the prooerty.
In 3 years.
I lived there 15 years.
We sell it in 18 years.
Best regards
Gus

Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected] , where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.

I own a inactive farming corporation in alberta ,can i purchase a condo and rent it at a fair market market value to myself

Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected] , where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.

Initially, the corporate tax on rental income is around 50%, however a large portion of that is refundable when the company pays out taxable dividends to the shareholders (@ 38.33% of the dividends paid).

Effect of the refundable dividend tax is that a BC corporation owning a rental property pays just 20% tax on the net rental income.

RE/MAX has your Roatan-realestate experts and has the ‘ experience and the know-how to make their ‘savvy, informed clients into successful homeowners, investors and sellers ℠ !

This site is a ‘one stop shop’ for Roatan-RealEstate that has best real estate opportunities on Roatan along with information from the best sources to help guide you into the right decision.

Roatan-RealEstate in The Bay Islands, compared to other Caribbean islands, is still very much a bargain, no matter what your price range. Of course, this site is also a great source of real estate information. This site, and its associated sites, (RoatanBayIsland.com and Roatan-REALTOR.com) provide a huge amount of quality, current and well researched information.

Your ‘one stop information center’ includes a search engine on the Roatan MLS sites Roatan MLS, a helpful VIDEO SERIES, that provides information from accountants, legal professionals, medical facilities/services, insurance and top tips from long term ex-pats who have done just what you are thinking of doing. As a matter of fact, we have video series that features “All that You Need to Know” that any potential purchaser should view to be informed.

Cumulatively, our RE/MAX Roatan Team have lived here a long time and there is no doubt the The Bay Islands are an amazing place for you to make a new or second life as well as being a great place to invest. It has it all, it is not only warm and stunningly beautiful, it has diversity (not only ascetically but culturally too) and is steeped in customs, history, and traditions. With several island ancestries combined with numerous foreigners from North America and Europe, it is an exciting place to live: from learning about people and races; to having your taste buds explode with the large culinary local and imported options. From the more populated, western end of the island white sand beaches and aqua waters, to the beauty of the ‘all but untouched’ pristine locations on the east end, Roatan does not fail to captivate! If you wish to take a virtual tour to learn about the island’s geography and ecology before you come here (CLICK HERE).

What Makes RE/MAX Roatan-RealEstate Number One?

One of the slogans that RE/MAX has trade-marked worldwide is “Above the Crowd”. We, here at RE/MAX on Roatan, absolutely believe that this is our goal every day, of every week, of every month and year. We are regularly pushing the envelope, here on the island, to advance the interests of our clients, whether they are buying or selling.

Yes, we have three offices, in great locations, for your convenience. Yes, we are the only company that publishes our very own real estate magazine that is placed in about 50 prime island-wide locations. And yes, we are part of the largest real estate company in the world – RE/MAX International has well-over 100,000 agents and in over 100 countries meaning that we have so many avenues to market our sellers’ properties for sale internationally as well as provide buyers’ purchase options worldwide.

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How to invest in preconstruction real estate

How to invest in preconstruction real estate

How to invest in preconstruction real estate

How to invest in preconstruction real estate

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We are Industrious people. True to definition, we are a group of hardworking, energetic, and dedicated individuals.

Our Values

How to invest in preconstruction real estate

We act with INTEGRITY

We believe in doing the right thing, even when it’s more difficult or time-consuming. This means being honest, having a strong moral compass, and the ability to make tough decisions.

How to invest in preconstruction real estate

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Our team truly cares about our members, partners, and each other — and it shows. We treat one another with respect and compassion and put the interests of the team before our own.

How to invest in preconstruction real estate

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At Industrious, everything we do comes down to creating great days at work — and that means making sure that our team members feel supported and valued. Our benefits are designed to do just that by giving our employees the tools, services, and opportunities they need to thrive.

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How to invest in preconstruction real estate

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Condoimmo has launched a new condo rental property investment opportunity. The company currently supports national and foreign investors interested in investing pre-construction real estate in Toronto and Montreal.

Toronto, Canada, Dec. 08, 2021 (GLOBE NEWSWIRE) —

The newly launched opportunity from Condoimmo is suitable for investors who want to use their condo to generate an additional revenue stream. The team of specialists at Condoimmo are well placed to help potential investors determine the right project for them based on their overall goal.

Further information is available at https://condoimmo.com

Aside from offering portfolio diversification, the newly launched opportunity from Condoimmo reflects the need for stability during times of uncertainty. Many individuals are closely monitoring the stock market and looking for new ways to preserve and build wealth, instead of relying on traditional options such as banks.

In addition to give you access to the best pre-construction condo project in Toronto, Condoimmo provides a full-service rental property management solution. This means the company efficiently finds quality tenants and maintains the property.

Since there are many ways to invest in real estate, Condoimmo made a short video to help you find out if pre-construction condo investment will fit your investment criteria, more details are available at https://rdv.condoimmo.com/condoright1

Not all condos are the same. Condoimmo has access to the latest condo project, new built condo and market trends. This ensures that when they work with investors, they are fully informed and aware of current market conditions. This offers peace of mind compared to purchasing a property without support.

Another advantage of working with Condoimmo is the fact that the company can help potential buyers increase their likelihood of securing their preferred condo. For instance, the company states that securing pre-approval with a bank or financial institution can expedite the process, especially when the market is competitive.

Condoimmo states that while interest rates are currently low, they could increase, which will have implications for future mortgage or finance payments. Working with a realtor can also help investors and first-time buyers to secure the best deal possible.

Autodesk ( ADSK Quick Quote ADSK – Free Report) recently announced its intent to takeover ProEst for an undisclosed sum. California-based ProEst specializes in the development of cloud-based estimating software solutions for companies in the construction domain.

Following the acquisition, the ProEst solution will be integrated with the Autodesk Construction Cloud platform that includes offerings like Autodesk BIM Collaborate, Autodesk Takeoff, Autodesk Build and BuildingConnected. The integration of the ProEst solution will help construction teams to handle all essential preconstruction and construction workflows on a single platform, stated Autodesk.

ProEst software solutions help businesses create estimates, execute digital takeoffs, handle bid-day processes as well as produce comprehensive reports and proposals. With the takeover of ProEst, Autodesk intends to solidify its portfolio of preconstruction solutions within the Autodesk Construction Cloud platform.

The addition of ProEst solutions to Construction Cloud will help clients to improve cost tracking compared with estimates, thereby providing increased visibility into the project feasibility.

ProEst’s solutions will also enable clients to gain access to estimating information anytime and anywhere, as well as aid in importing third-party cost databases to rationalize estimation workflows, noted Autodesk.

Autodesk, Inc. Price and Consensus

How to invest in preconstruction real estate

Subject to regulatory and customary closing conditions, the transaction is anticipated to conclude in fourth-quarter fiscal 2022 (which ends on Jan 31, 2022). Autodesk added that the acquisition would have no impact on the company’s fiscal fourth-quarter guidance as announced in November 2021.

Autodesk’s Sound Acquisition Strategy

Autodesk makes frequent investments in businesses, software solutions and technologies that it deems complementary to the company’s business through acquisitions and strategic collaborations.

In April 2021, Autodesk announced its intent to take over Toronto-based Upchain. The company specializes in providing cloud-based product lifecycle management (“PLM”) and product data management (“PDM”) software solutions.

In March 2021, Autodesk completed the takeover of Innovyze, Inc, specializing in the development of water infrastructure software solutions. Last year, the company purchased Spacemaker AS to strengthen its early-stage design and outcome-based design capabilities.

ProEst will enrich the company’s Construction Cloud platform. Autodesk Construction Cloud is witnessing steady traction with owners, general contractors and subcontractors across the construction industry, which is driving the top line. In September 2021, Autodesk announced that more than 350,000 worldwide projects are leveraging Autodesk Construction Cloud to create highly-competent preconstruction workflows.

Autodesk’s acquisitions of Pype (2020), Assemble Systems (2018), and BuildingConnected (2018), and PlanGrid (2018) have bolstered its Construction cloud platform.

Zacks Rank & Stocks to Consider

At present, Autodesk currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Arrow Electronics ( ARW Quick Quote ARW – Free Report) , Cirrus Logic ( CRUS Quick Quote CRUS – Free Report) and Alphabet ( GOOGL Quick Quote GOOGL – Free Report) . While Alphabet sports a Zacks Rank #1 (Strong Buy), Arrow Electronics and Cirrus Logic carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

For Arrow Electronics, the Zacks Consensus Estimate for 2021 earnings is pegged at $14.60 per share, up 8.1% in the past 60 days. The long-term earnings growth rate of the company is pegged at 27.4%.

Arrow Electronics’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.6%. Shares of the company have rallied 28.6% year to date.

The Zacks Consensus Estimate for Cirrus Logic’s fiscal 2022 earnings is pegged at $5.37 per share, up 7.6% in the past 60 days. The long-term earnings growth rate of the company is pegged at 9.3%.

Cirrus Logics’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14.9%. Shares of the company have increased 7.9% year to date.

The Zacks Consensus Estimate for Alphabet’s 2021 earnings is pegged at $108.29 per share, up 6.3% in the past 60 days. The long-term earnings growth rate of the company is pegged at 25.8%.

Alphabet’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 41.5%. Shares of the company have surged 61.7% year to date.

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