Posts by AskExpert:
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Q: My Dad and I are considering investing in a property together and flipping it after we conduct some improvements. He already has a small renovations business and a few trades people as employees. We plan to use the same trades people for the improvements on our investment (flip) property. We’re wondering if we should start a new company for this venture to allocate expenses, track accounting and benefit from potential tax advantages. Would running this flip through a new company make more sense than doing it as individuals?
A: Starting a company can be expensive. You are probably looking at $1,000 or so to set it up and then $1,500-$2,000 per year to maintain it. (Tax returns, annual reports etc.)
If you are pulling out the profits right away there isn’t an advantage to incorporating. If you plan to leave profits in the company, then you benefit from the low tax rates.
I suggest you talk with your accountant before making a final decision.
Q: We are Canadian and we own a home in the Arizona and would like to give it to our daughter. What are the tax implications for us?
A: When giving properties to our children we have to keep two things in mind.
The first is that it is a deemed disposition as far as the American and Canadian tax authorities are concerned. You are responsible for tax due on any gain since you bought it.
The second is that there is a maximum amount per year you can “gift” to someone before it incurs a tax liability to them. So the person you are giving the property to may have to pay tax unless you gift it in annual increments below the “gift threshold”.
My advice is to contact your accountant in Canada. They will know the Canadian side of it and usually they will know an accountant that is familiar with US tax law. If not, contact an accountant in the U.S. too.
Good luck! – Ralph
Q: My wife & I are looking at investing in a condo in Radium Hot Springs. As with most every where else the property values are considerably less than they were 2 to 3 years ago. What do you feel the future looks like for that area? We are looking at this property as a longer term property that we would continue to use for a number of years.
A: I am invested in Kimberley and Fernie and spend my winters there. I think from a personal lifestyle perspective it is perfect.
I do not worry about markets, I DO worry only about the deal I make…This is a perfect time to make some ‘stink bids’. New developments and resort properties are hurting and they a e willing to listen.
Don’t rush, don’t hurry…but make a lot of offers and learn these 3 words. So what, next!
If it isn’t a great deal…go to the next one.