Recreational land

[conan]

Hey folks
If I bought a quarter section of land for recreation is it best to keep it in a corporation or a numbered company or in my own name.
I have zero experience in this and am looking for some advice.
Also is there anything else I should look out for?
Is there a buying land for dummies?

Regards Conan

[brslk]

What you wanna do is let me know where it is and allow me to come ride my dirt bike and mini bikes!
Sorry, I have no real advice to offer. Lots of people in this group smarter than I, I'm sure someone will have some good advice to give you shortly.

[conan]

[MountainTi]

Talk to an accountant (rather than getting 18 different opinions)

[Dean2]

Originally Posted by MountainTi

Talk to an accountant (rather than getting 18 different opinions)

Agreed. Even someone who knows how to advise you is going to need a bunch of info you don't want to put on an open forum. Short form however, for 95% of regular, retail buyers, put it in your own name. The annual filing and accounting costs to keep a company active aren't worth it for a single piece of land.

Also, talk to a friend or a good Realtor that have experience buying raw land. There are more than a few pitfalls to buying land if you have never done it and don't know what you are doing.

[conan]

Good advice all thanks

[sirmike68]

Originally Posted by conan

Hey folks
If I bought a quarter section of land for recreation is it best to keep it in a corporation or a numbered company or in my own name.
I have zero experience in this and am looking for some advice.
Also is there anything else I should look out for?
Is there a buying land for dummies?

Regards Conan

Not sure a recreational piece of land would qualify as some sort of business write off.

[Trochu]

Originally Posted by Dean2

Agreed. Even someone who knows how to advise you is going to need a bunch of info you don't want to put on an open forum. Short form however, for 95% of regular, retail buyers, put it in your own name. The annual filing and accounting costs to keep a company active aren't worth it for a single piece of land.

Also, check with your accountant, but I think in your own name you don't have to claim capital gains. The down side, assuming your transferring money from a corp. to personal, is the tax rate is higher. A big factor is how long you keep it.

[MooseRiverTrapper]

Originally Posted by Dean2

Agreed. Even someone who knows how to advise you is going to need a bunch of info you don't want to put on an open forum. Short form however, for 95% of regular, retail buyers, put it in your own name. The annual filing and accounting costs to keep a company active aren't worth it for a single piece of land.

Also, talk to a friend or a good Realtor that have experience buying raw land. There are more than a few pitfalls to buying land if you have never done it and don't know what you are doing.

Pitfalls to do a raw land transaction?

[sprinklerdog]

Talk to an accountant or tax specialist in this area. You can have a personal gst number and avoid taxes. If you rent it at all you can depreciate it by performing improvements but that becomes taxable if you ever change the use of land or sell it. If you do it through a business it could be a taxabke benefit personally.
You could hold it through a business on a line of credit and let your company take the gains in value and borrow against it. There's bunch of different things you can do with it. Best advice is talk to tax specialist or two about what youd like to do and what you can do.

Geo

[Swamp hunter]

Business or personal makes no difference, if it is vacant land you can register for a GST number even without a business to avoid paying gst as it is "vacant" and in Canada is exempt from gst. Once you own it you can pursue farm status for expenses (tax purposes etc). Not an accountant just purchased a 1/4 last year on the edge of the green zone for putting up hunting cabin.

[Dean2]

Land or any other property in your personal name, that is not your principal residence, you will pay Capital gains on when you sell it. All properties in a Corporation are subject to capital gains, there are no principal residence exemptions in a corporation.

Unless you actually earn active farm income, NOT land rent for pasture or crop, there are no farm deductions available. Any rental income is taxed the same no matter how you hold the land. Unless the corporation has significant holdings and income outside this 1/4 you will actually pay higher tax all in. If you claim farm expenses without farm income they will eventually get punted by the CRA and you will owe the tax, penalties plus interest. You can claim maintenance, like fencing, repairs to buildings but there are no deductions for capital improvements, they get added to the cost base. You cannot depreciate the land, only the value of buildings etc. This is recaptured on sale if you sell it for more than your cost base.

Moose River Trapper - As far as pitfalls, to name a couple, environmental contamination from previous land use, one property we looked at, research showed it had previously been the site of a large tank farm, not disclosed by vendor. Also, abandoned wells, pipelines etc that have not been removed/remediated and are owned by defunct companies, active pipelines that limit development and resale, easements that restrict use or development, and I could go on a lot longer.

Raw land is a good investment, but you do have to have some idea what you are doing. If you haven't done it before, get good advice.