Spare yourself from personal liability by buying property under a corporation name. When you incorporate your business, you further protect your personal finances and personal property in the event of a legal action being filed against you. Aside from gaining further personal protection, you can also increase your business assets, credit rating and enter into other real estate investment after your first investment property is purchased.
Steps to buying a property under a corporate name
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Find potential properties for sale.
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Do your research and make contact with potential sellers to express your interest in the property.
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Locate the property you want to buy.
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Speak to your broker and have them assist you with your contract submission to purchase the property using your corporate name. For instance, the purchaser of the property will not be your personal name, it will be the corporation instead. The deposit or down payment should come from the corporation’s bank account.
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Hire a real estate professional such as a mortgage broker to assist you in completing a pre-approval and mortgage loan application for your corporation to secure financing for your property purchase. You will need to submit:
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Article of incorporation
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Bank Statements
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Business License
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Tax ID number
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Income tax returns for the last 2 years
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If you are the authorized signer for the corporation you will need to endorse and execute all the closing documents, this includes providing your corporation’s tax identification number to the closing agent. This will ensure your purchased property is both deeded and taxed properly.
Real Estate Investments and Incorporation
If you’re an investor, you may be asking yourself if you should incorporate your real estate investment business, right? First, this is not an easy decision by any means, you need to further asset your assets and other business ventures to help you make an informed decision.
If you’ve been personally investing in property, a corporate entity should be used for these reasons:
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Flexibility. If the corporation has multiple owners the legal structure of a corporation probably makes the most sense.
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Legal benefits. Some of the legal benefits when using a corporation name are anonymity, liability to third parties and additional legal protection under the corporation, where you’re not protected by your insurance.
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Tax advantages. Being a corporate owner can can provide tax saving for your family in the long-term. Estate and succession planning opportunities may also be available.
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Qualifying for a mortgage. Banks tend to be somewhat cautious when it comes to corporate lending. Using a mortgage broker can grant you access to a network of other lenders who can qualify you for a mortgage under a corporate name.
Do you have question about buying your corporate real estate? Speak to the brokerage team at AKAL Mortgage today.
When we say Yes! We stand behind our promise.