What Can You Do With a Real Estate Holding Company Canada?

What can you do with a Real Estate Holding Company Canada

Registering a real estate holding company in Canada can have many benefits. This type of company allows you to invest in a variety of financial assets and earn tax-free dividends. It can also limit your personal liability from lawsuits. It is a good idea to consult with a CFP in Ottawa for guidance.

Benefits of registering a real estate holding company in Canada

While the process for registering a real estate holding company in the country is similar to that of registering other businesses, there are some distinct advantages of a holding company. These include the ability to use a unique number and tax benefits. Additionally, a holding company can also serve as an effective estate planning tool.

Because real estate holding companies are a major investment, it is a good idea to seek advice from a real estate accountant. These professionals can help you maximize your tax deductions and overall cash flow. They can also help you to reduce expenses, which will save you money in the long run. Besides, they understand the ever-changing tax laws and can contribute to the success of your business.

For new real estate investors, registering a real estate holding company can be intimidating. But there are many benefits of incorporating a holding company, and these benefits can often outweigh the startup costs. By incorporating your holding company, you will be able to maximize your financial returns and minimize risks while still ensuring that your personal assets are protected.

Another benefit of setting up a holding company is the ability to invest idle cash, such as stocks, bonds, or GICs. By forming a holding company, you will also be able to avoid many tax implications that come with owning other businesses. Setting up a holding company also allows you to use your excess cash to expand your business empire and to diversify your investments.

Tax-free dividends

If you have a Real Estate Holding Company Canada in your portfolio, you may be eligible for tax-free dividends. However, your tax-free dividend income depends on the number of shares that your holding company holds. Typically, you can defer tax on the dividends until the holding company pays them. This is especially beneficial for shareholders who pay a high marginal tax rate. You should check with an accounting firm to learn more about tax-free dividends.

Another benefit is that Canadian-controlled private corporations are tax-exempt. To qualify, you must have at least 90% of your holding company’s assets used for an active business in Canada. Moreover, the profits of the operating company may be accumulated up to 10% of the total assets. Other tests apply as well.

Tax-free dividends from your holding company may also benefit you when you sell your business shares. Unlike ordinary stocks, you can also sell shares of your holding company and take the profit. However, you may have to pay capital gain taxes on the profits you make.

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