Ep 55 - Pros and Cons Of Buying A Rental Property In A Corp Or Personal Name

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Show Summary:In this episode of the "Wisdom Lifestyle Money Show," Scott Dillingham, discusses the pros and cons of buying properties under a corporation (Corp) versus buying personally. The major benefits of buying under a Corp include mortgages not appearing on your personal credit report, allowing investors to maximize their borrowing capacity. Additionally, the Corp structure provides extra liability protection, as only the assets within the Corp are at risk in case of a lawsuit.However, there are some drawbacks to buying under a Corp. Firstly, properties purchased personally will show up on your personal credit report, potentially affecting your borrowing ability. Furthermore, interest rates on Corp-owned properties may be higher because fewer lenders offer corporate mortgages, resulting in less competitive rates. Setting up a corporation for property ownership may also require all directors of the Corp to be co-owners and listed on the mortgage, which can complicate matters if certain directors only hold shares for tax purposes.Scott also mentions a "bare trust agreement," a strategy that allows you to close on a property personally and then transfer it to the Corp for tax purposes. This approach can be beneficial from a tax standpoint, but it doesn't shield you from personal liability.In conclusion, Scott advises seeking guidance from an accountant and lawyer to determine the best approach for your situation. While buying under a Corp can offer advantages like increased borrowing capacity and liability protection, it might not be suitable for everyone. Understanding the implications of each option is crucial to making an informed decision. Scott mentions upcoming webinars in their investor hub that will cover this topic in more detail, providing valuable resources for those interested in further exploring the subject.Scott's email, if you have any show suggestions or feedback is scott@lendcity.ca.Scotts office number is 519-960-0370 if you want to set up a call to see how LendCity Mortgages can help you.