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Submitted by: Tom Karadza

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Hi Celeste, Thanks for your question! There's so much to share here that we could write a book about it! 1. CRA does consider real estate as a "passive" business and so it is taxed at a very high rate, in the mid-30% range. 2. If you own it personally then, as you state, it becomes income and you pay the appropriate average tax rate. There are many advantages to buying using a corporation but you'll need a corporation with enough income to qualify for the mortgage. You'll also want a very good real estate accountant because there are legal and ethical ways to get that tax corporate tax rate down. If you don't a corporation that will qualify to purchase property you may be stuck buying properties using your own name - this is very common so don't become discouraged. If liability is a concern make sure you have at least $2,000,000 coverage on your insurance policy. With the proper insurance policy you should be able to protect yourself from most potential liabilities. A chat with a good local accountant who knows real estate (because many claim to but few actually do) may be very useful before you begin. Hope that helps! Tom.

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