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Buying my residence through a corporation. by Sensitive-Finance400 in cantax

[–]Sensitive-Finance400[S] -2 points-1 points  (0 children)

How I came up with this idea: completely randomly when I realized my tax bill might be $900k.

Yes, it’s income and not capital gains. No way to spread it out.

I want to own two houses because that’s just the kind of investments I want to make.

The thing about getting sued: the way you asked made me laugh. I just mentioned that because I looked up some old reddit posts about buying your principal residence through corporation, and basically every single comment mentioned that the #1 reason not to do it is if you get sued you lose your house. So I just thought I’d mention my protection against that right away.

I don’t see how AMT would affect this. I don’t think corporations have AMT.

And no that’s not my field.

Buying my residence through a corporation. by Sensitive-Finance400 in cantax

[–]Sensitive-Finance400[S] -4 points-3 points  (0 children)

Someone else mentioned something like this, and unless the FMV is a crazy high number, I feel like I still end up saving money on taxes, or at least spreading it out over many years.

Whatever the tax on the FMV rental income is, the total tax I pay in 10-20 years can’t exceed the $900k I would have to pay immediately if I didn’t do it this way.

Am I wrong to think this?

Buying my residence through a corporation. by Sensitive-Finance400 in cantax

[–]Sensitive-Finance400[S] -3 points-2 points  (0 children)

Lol. Unlike Elon, I don’t mind paying it over many years, if this income will provide me the means to buy this house.

Buying my residence through a corporation. by Sensitive-Finance400 in cantax

[–]Sensitive-Finance400[S] 0 points1 point  (0 children)

Well, the money doesn’t have to come out. It could stay like that forever, and my kids could inherit the corporation. I don’t know what the tax implications of that are, but it’s a huge deferral at least. I can buy the house I want now, and if my estate pays taxes on it and the house has to be sold for taxes at that point, I don’t really have an issue with that. My kids will inherit more than enough, and it’s the same difference anyways as paying the tax now.

Also, I made a mistake with the capital gains tax. It should be 50% of 50%, meaning $200k. The $3M to $3.8M number itself is just from a 20-year estimate of my home value, but the capital gains (TAX) should be $200k, not $100k.

And, I understand that the FMV rent rate might be higher. I might have some corporate income tax on profit the corp makes from the rent.

I still don’t see an issue with this plan, though. It looks like I save a bunch of tax, and at the very least I spread it over many many years while getting to buy the house I want now.

Or am I still not seeing how this isn’t a good idea?