Income Taxes for Investors (Northern Ontario, Canada)

[Chuck M.]

Hoping for some of the more experienced REI's could provide some guidance.

My wife and got into investing almost by accident. Her parents needed housing and we wanted to control & subsidize their cost of living through their final years.

Blessed by the HELOC gods and good appraisals, we now own 9 units in Northern Ontario.

Because it was easy and we kept getting approved, we did 8 of 9 through our primary lender. This "hey here's another that meets our criteria, let's buy it" approach led us to do all the transactions outside of any corporate structure.

Some back of napkin math says that next year when we fully realize all our 9 units of income personally will be quite interesting. The costs involved to move to the Cherry Chan recommended 3-tier corporate structure (legals, land transfer tax) however don't seem to work either with the small amount of units we own.

At this point we're being advised that our only strategy is to buy as much RRSPs as we can afford. We haven't taken advantage of depreciating our properties for fear it'll hurt us on portfolio exit.

Has anyone else faced this dilemma? What did you do? Any recommended accountants/financial advisors?

Chuck

[Chris Baxter]

@Chuck M. I haven't read the Cherry Chan book, but do have a multi-tiered corporate structure with a holding company that owns both my operating company and my real estate companies.  This structure is also defined in this essential book: Legal, Tax, and Accounting Strategies for the Canadian Real Estate Investor. I don't find the costs of this framework to be overkill and we are set-up for success no matter how large we grow. In identifying an accountant, look for one that has experience in REI and understands your vision for the future. Most professionals that I interviewed had no idea how to implement strategies for REI tax reduction and did not share my vision for growth and eventual retirement. A good accountant will ask YOU the questions (not the other way around). Keep looking until you find one that does...

Chris