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Personal Ownership vs. Corporate Ownership
Personal ownership means:
- Rental income is taxed at your personal marginal tax rate
- You can use personal tax deductions
- Capital gains may qualify for principal residence exemption (for part-use scenarios)
- Easier financing for smaller portfolios
Corporate ownership means:
- Rental income is taxed at the corporate tax rate
- You gain access to tax deferral strategies
- You separate personal liability
- Requires higher-level accounting and compliance
The Real Tax Advantage of Incorporation
In Ontario, corporations often pay lower tax on retained earnings than individuals at high personal tax brackets. This allows investors to:
- Reinvest profits more efficiently
- Delay personal taxes
- Scale portfolios faster
- Use shareholder loans, dividends, and salary strategies
However, when money leaves the corporation, personal tax still applies — so incorporation is about deferral and structure, not tax elimination.
When Incorporation Makes Sense
You may be a good candidate if:
- You own multiple rental properties
- You earn high personal employment income
- You are scaling aggressively
- You are reinvesting profits instead of living off them
- You are building a long-term portfolio
When Incorporation Does NOT Make Sense
It may not be ideal if:
- You own one small rental
- You rely on rental income for living expenses
- You are in a lower personal tax bracket
- You prefer simple financing + minimal complexity
Financing Is Often Harder Inside a Corporation
Many lenders:
- Require higher down payments
- Offer slightly higher interest rates
- Demand full corporate financials + guarantees
Some investors begin personally and roll properties into corporations later using refinancing or restructuring.
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