LLC equivalent in Canada?

[Shahriar K.]

Hey everone

As mentioned I do have a rental property that I actually live in the basement myself(saving as much as I can). reading the forums everyone is mentioning having and LLC for the rental property and it makes sense to me. But I was wondering what the canadian guys are using to protect themselves.

also is there any proper steps you can take to save more of your money when you are going to sell your investment property(%50 of the profit is taxable).

thank you

[Hadi Komeyl]

Hi Shahrian,

1.In Canada we don't have LLC. The closest thing is a corporation (source). Definitely recommended if you want to limit liability.

2.Best way is to make it your primary residence. Here are some options to consider:

1., Canada revenue agency (CRA) policy states:

"If the property was your principal residence for every year you owned it, you do not have to report the sale on your return. However, if at any time during the period you owned the property it was not your principal residence, you may have to report all or part of the capital gain". (source)

2.your second option is make your corporation and buy it as if the company owns it, which allows you to write off a lot of the expenses and defer taxes, but getting a mortgage for a corporation would be hard.

3. There are lots of trade-offs, and its the last thing anyone wants to hear, but unless you are willing to learn all the details I would recommend talking to a Chartered Accountant to find out what the best structure is for you.

I had a very similar, tax related questions when I first joined, Roy N was kind enough to refer me to this book: http://www.amazon.ca/Accounting-Strategies-Canadian-Estate-Investor/dp/0470677732/ref=pd_sim_b_13.

Best of luck,

hadi