Ask Allan Forum
Get expert answers to your tax questions straight from Allan, our owner and experienced CPA. It’s free, direct, and designed to help you make the best decisions when it comes to your taxes.
Hi there. Question Should I take $150,000 that is just sitting in my business ssavings account and incorporate another small business with the purpose to buy an investment property?
Follow these steps:
1. Incorporate a company to purchase real estate (e.g. Real Estate Inc.)
2. Make a tax-free loan (e.g. $150,000) from your existing operating corporation to Real Estate Inc.
3. Charge 1% interest on the loan to be paid by December 31 of each year
4. Real Estate Inc. will use the loan proceeds + a bank mortgage to purchase the property
5. Real Estate Inc. will collect rents, pay for the mortgage, and relevant property expenses