In Ontario’s evolving real estate market, it’s not uncommon for investors or business owners to ask whether it makes sense to purchase property under a corporation rather than their personal name. While corporate ownership isn’t the right fit for everyone, it can offer compelling advantages in the right circumstances—particularly for those investing in multiple properties, high-value assets, or income-generating real estate.
Let’s break down the key considerations.
1. Liability Protection
One of the primary reasons buyers choose to hold property in a company name is liability separation.
When real estate is owned personally, the individual assumes full legal and financial responsibility for the property. By purchasing through a corporation, you create a legal buffer between yourself and potential liabilities—such as tenant disputes, property damage claims, or other unforeseen events.
This separation can help protect your personal assets (like your home, car, or savings) in the event that legal action is taken against the property or its operations.
2. Tax Planning and Income Splitting
For investors holding rental or commercial properties, corporate ownership can provide tax planning flexibility.
Profits earned within a corporation are taxed at the corporate rate, which can be lower than the top personal income tax rate. Additionally, funds can be distributed strategically—whether through dividends, shareholder loans, or salary—to optimize tax efficiency.
A corporation can also facilitate income splitting among family members who are shareholders, allowing income to be distributed in a more tax-efficient manner. However, this must be structured carefully to comply with CRA rules.
3. Estate and Succession Planning
Owning property through a corporation can simplify estate transitions.
Rather than transferring the property itself, ownership can be transferred through the sale of shares, which may help reduce probate fees and ease the inheritance process. This is especially valuable for families or investors who hold multiple properties and want to plan for smooth succession.
4. Privacy and Discretion
In some cases, buyers prefer the privacy that comes with corporate ownership.
When property is registered in a company name, the owner’s personal identity doesn’t appear directly on title—offering an extra layer of discretion. This can be particularly appealing for high-profile individuals or investors with multiple holdings who wish to keep their real estate portfolio private.
5. Flexibility for Partnerships and Joint Ventures
If you’re buying property with partners or investors, a corporation provides a clear framework for ownership, profit-sharing, and decision-making.
Instead of multiple names appearing on title, the corporation owns the property, and each investor holds a defined percentage of the company’s shares. This structure simplifies joint ventures, profit distribution, and liability management between parties.
6. Potential Drawbacks to Consider
Despite the benefits, purchasing real estate in a company name isn’t always advantageous.
-
Financing can be more difficult—lenders often require personal guarantees, larger down payments, or higher interest rates.
-
Land Transfer Tax still applies at purchase, with no special exemptions.
-
Accounting and legal costs are higher due to annual filings, corporate maintenance, and bookkeeping.
-
Capital gains treatment differs: corporations don’t benefit from the principal residence exemption, and capital gains are taxed at the corporate level.
For most primary residences or one-off investment properties, personal ownership remains simpler and more cost-effective.
7. Who Typically Buys in a Corporation?
This structure is most common among:
-
Real estate investors with multiple rental or commercial properties
-
Developers or builders purchasing land for future projects
-
Professionals who want liability protection for business-use properties
-
High-net-worth individuals engaging in advanced tax or estate planning
Final Thoughts
Purchasing real estate in a company name can be a smart move—but it’s not a one-size-fits-all solution. The right choice depends on your long-term goals, the type of property, and your financial structure.
Before proceeding, always consult with a real estate lawyer, accountant, and mortgage advisor familiar with corporate real estate ownership in Ontario. Together, they can help ensure your purchase is structured to maximize protection, efficiency, and flexibility.
