Entrepreneurship & Small Business

Corp, loan to purchase or refi house.

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  • Jul 3rd, 2015 5:46 pm
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[OP]
Deal Addict
Dec 13, 2007
2026 posts
542 upvotes
Toronto

Corp, loan to purchase or refi house.

Few years back I opened a HELOC and took X$$ from it. Now I have >X$$ in corp account. Technically I can loan that money to pay off my HELOC, and it looks like that would be legit loan from corp. Then, I could take the same X$$ from HELOC again, and buy some investments like ETFs or whatever. The I can treat my HELOC as tax deductible investment loan. (Everything correct so far?)

Question, can I skip the part or payment to HELOC and widrawing money once again, and go straight for purchasing investments with the money I have in corp acct? The problem is I have a whole bunch in USD, and I'd rather purchase ETFs for USD than to convert these to CDN.
4 replies
Deal Addict
Jul 21, 2004
1340 posts
285 upvotes
The question would be do you want it to be considered as a corp investment or a personal investment.

if you are treating it as personal. you would want a paper trail so cra don't audit you as a corp investment
Deal Fanatic
Aug 21, 2007
5906 posts
742 upvotes
Markham
slavka012 wrote: Few years back I opened a HELOC and took X$$ from it. Now I have >X$$ in corp account. Technically I can loan that money to pay off my HELOC, and it looks like that would be legit loan from corp. Then, I could take the same X$$ from HELOC again, and buy some investments like ETFs or whatever. The I can treat my HELOC as tax deductible investment loan. (Everything correct so far?)

Question, can I skip the part or payment to HELOC and widrawing money once again, and go straight for purchasing investments with the money I have in corp acct? The problem is I have a whole bunch in USD, and I'd rather purchase ETFs for USD than to convert these to CDN.
you could, but investment income in corps have different taxation rules, which are generally not all that favourable. Dividends taxed at 33.33% (until withdrawn from the corp in form of dividends out), interest at 462/3, again until dividend out...cap gains also 462/3 but only half of the gain is taxed.
[OP]
Deal Addict
Dec 13, 2007
2026 posts
542 upvotes
Toronto
Personal, of course. Ideally I'd like to skip actually paying of HELOC but have tax deductuble HELOC and loan from corp for the purpose of purchasing home.
Deal Fanatic
Aug 21, 2007
5906 posts
742 upvotes
Markham
i suppose you could ultimately open a personal account and fund it using the money thats in your corp account as a way of skipping steps, but sometimes actions are taken to create a paper trail in case of audit...otherwise if your HELOC balance hasnt changed an auditor may not let it go

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