Should You Incorporate Your Rental Property
For anyone looking to build wealth, achieve financial independence and/or retire early (see FIRE movement), it is important to build sources of passive income i.e. streams of income that are generated month to month without having to actively work for them. One of the most popular methods of building passive income is to purchase a property that generates rental income. If done correctly and with some luck, the return on investments (ROI) , which is composed of both rental income and appreciation in the value of the property, can significantly improve your net worth.
An important decisions when purchasing a rental property is whether you should own the property in your own name or purchase it through a corporation. The right decision depends on a variety of factors which are discussed below:
Consider These Financial and Tax Implications When Buying a Home
The Canadian real estate market has been a good place to invest in recent years, although comparisons to the US real estate bubble, which finally culminated in 2008, are continuing to intensify. Potential homeowners often find themselves seduced by their vision of the perfect home in the perfect neighbourhood and end up in a difficult situation, referred to as “house poor”, where the majority of their disposable income goes to paying down their mortgages. This can be avoided by ensuring that you realistically assess what you can afford and being financially responsible.