5 Impacts on Transferring Rental Properties into a Corporation

5 Impacts on Transferring Rental Properties into a Corporation

Real estate investors usually start investing in their personal names.

It’s easy, simple, and the cheapest form of ownership.

Once they test the water, many of them decide that they will continue their investing journey.

Some investors even take it to the next level by turning investing into a full-time career.

For the majority of us, we keep our day jobs/businesses and we invest on the side to build our long-term wealth.

However, owning a large portfolio in personal names is often not advisable for liability protection reasons. If a tenant/stranger sues you on your portfolio, your home and your RRSP and TFSAs can all be at risk.

And of course, a corporation provides flexibility in terms of structuring your portfolio deals. In some cases, it can even be used to minimize your tax. Learn more in detail in the video

What if you already own a large rental portfolio in your name, what are the tax impacts to move them into corporations?

This can be a tricky question and it’s usually the most common question investors have.

  1. Will I need to pay capital gains tax when I transfer the properties to my corporation? This depends.

    If the properties are held as the long-term buy and hold, chances are, you can avoid paying the capital gain tax with the proper election form filed.This election allows you to defer the capital gain when the corporation eventually sells to a third party.Costs are associated in filing the form with CRA.If the property you transfer has been your primary residence up until the point of transfer and you have always lived in the property during the years of ownership, chances are, there is no capital gain tax. You can claim this property as your primary residence.Be sure to consult a professional before making the transfer.

  2. Are there any land transfer tax impacts? We, as accountants, rarely deal with them.

    Having said that, the general rule of thumb is that if there is a transfer of ownership from an individual to a corporation, the Ontario land transfer tax would apply.If your properties are in Alberta, there is no land transfer tax. 

  3. Can the land transfer tax be avoided? There are some instances where the land transfer tax would not be applied. Be sure to consult one of the experienced Real Estate lawyers to confirm the land transfer tax impact.
  4. What are the other impacts of transferring the properties to a corporation? More often than not, you will need to notify the banks who give you the mortgage on the property.

    Major banks, for some reason, do not like to take most residential mortgages with corporations.And yes, this means that they have the right to pull the mortgage.Most banks, however, consider 5 multi-units and up the commercial mortgage. They are less concerned about who holds the title for this type of mortgage. This includes commercial plazas, office buildings, industrial buildings, and manufacturing plants.We would still advise our clients to speak to their banks before making the transfer.

  5. What are the other costs associated with the transfer? Land transfer tax is seemingly the biggest expense.

    You will also incur some accounting fees for the rollover and tax planning.In some cases, a valuation must be done prior to the transfer. An appraiser may be engaged.And of course, you cannot really do an ownership transfer without the lawyers. Legal fees can vary from one lawyer to another.

You may wonder if there is any reason to move your portfolio to the corporations given all these proposed tax changes currently happening.

The objective of Bill Morneau’s proposed tax changes is to discourage small business owners paying only 15% tax on their corporate income to invest and grow their portfolio faster.

In another word, if you use after-tax income in your personal names to purchase properties, the proposed tax changes should not be applied to you.

However, we will still have to wait until the next Federal budget date to find out how these changes will be implemented to see if there are unintended consequences.

Until next time, happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

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Mena Annibale

Cherry, in my case, my corporation has no assets, hence I have to purchase property under my name but I want the corporation to own the property. I obviously don’t want to pay land transfer taxes twice – what’s my best course of action.

I will send you an email explanation. 🙂

sriram rangan

I own few properties under my personal name and want to change them to my corporation. do I need to pay the land transfer tax again? how do I go about doing this with as low cost as possible?


Hi. I am in the same boat and would appreciate your input.


I have the same question as above. Also, wondering if we can transfer the property from personal to commercial under current market value but above purchased price.
Do have any legal contacts that are familiar with this process?


Cherry, in my case, my corporation has no assets, hence I have already condo property under my name but I want the corporation to own the property. I obviously don’t want to pay land transfer taxes twice – what’s my best course of action. I heard Roll over CRA option , can you please advice and I will truly appreciate it

The article has a valuable content, which has helped me a lot in understanding more people are not only considering living in a tiny home or small house but maybe using one as elder housing or an income-producing backyard cottage.

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