Canadians! Transferring a property to an LLC?

Question

For instance, for my first purchase, if I wanted to buy a duplex would I then, at any point, be able to transfer that duplex to an LLC if purchased with a mortgage? And how soon?

If not, what would be the best way to protect myself and the asset if a tenant were to sue? Would insurance be enough

Eamonn McElroy · Answer

@Nicholas Whiteside

As Account Closed mentioned, you'll want to consult tax professionals on both sides of the border before you do anything.

Canada treats all US LLCs as C Corps without regard to how they are taxed in the US.

An LLC might not be the optimal entity.

Account Closed · Answer

@Nicholas Whiteside

There is no such thing as an LLC in Canada. You need to talk to an accountant who has clients who own in the USA. I suspect if you don’t you’re going to end up owing taxes x2... which would sure be spreading the lamesauce thick

Roy N. · Answer

It is pretty straightforward to execute a change of assignment on the APS.  We have never had an issue with a lender when transferring a property being purchased into a corporation we control.   Obviously, you need to provide the lender with the necessary corporate documentation and make your intention clear.

To make things even more obvious upfront, we generally make offers inclusive of "and/or assigns" on the "buyers" line.

Hai Loc · Answer

You can use a corporation as long as you are paying cash for the property.

Nat C. · Answer

@Nicholas Whiteside

You can but you need to get the lenders approval and they may have to re-assess the loan for the LLC. It depends on your lender so you need to check with them first

Natalie Kolodij · Answer

Is this an LLC in the US?

Rental property in US or Canada?

Canadians have some rules for entities on properties in the US

Hai Loc · Answer

@Nicholas Whiteside

Seems like you haven't done it yet but it's better to create the LLC after your offer has been accepted and use that LLC at closing with lender and attorney..

Hai Loc · Answer

@Roy N.

I am aware of that

This conversation was extended further back

@Nicholas Whiteside

Asked if you can purchase a property under under your personal name then transfer to LLC

Then asks if that is applicable in Canada

You definitely can get financing for your corp but your corp will likely have to be on the offer and  not your personally name. Lenders I dealt with are pretty strict with financing a company that is not on the offer..

Roy N. · Answer

Hal:  You can finance properties held in a corporation.   If it is a residential property,  lenders are going to want a personal guarantee, most probably from all shareholders.

Nicholas Whiteside · Answer

@Hai Loc

Thank you. Is this relevant for buy and hold in Canada?

Canadians! Transferring a property to an LLC?

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