# Pre-construction Purchaser Name



## bautista99 (Mar 23, 2016)

Hi,

I'd like to have the flexibility to either purchase personally or using my corporation. In the purchase agreement, am I just supposed to put, "First Name Last Name In Trust"? Do builders usually have any issues with that?

Thanks


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## Mortgage u/w (Feb 6, 2014)

The builder does not care. The lender and solicitor will, though.

Unless you are going for a commercial loan, your personal name must be on the purchase offer. If you are going to contract a residential loan and want to put it in your corporation, then your lender will require both your corporation and yourself to be on the mortgage deed. 

Therefore, I suggest you start off with a purchase offer in your name only and if you later decide to add the corporation, you simply sign an amendment with the builder to include the corp.


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## Valor (Jan 15, 2017)

You may want to include an assignment clause in the purchase & sale agreement, whether to exercise to assign it to your other entity is up to your discretion.


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## Userkare (Nov 17, 2014)

I hope you've talked to a good accountant who specializes in tax law about this. If you are going to live in it as your principal residence, that may be a taxable employee benefit. If the house is eventually sold, there will be a capital gain to pay tax on.

OTOH, If you're going to use it as a rental property, it's probably better that it's in the name of the corporation. I'm not saying you'd be a slum-lord, but if any tenant dispute leads to litigation, your personal assets would be safe.


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## Just a Guy (Mar 27, 2012)

The name on the offer to purchase is pretty meaningless. It can be changed at any time up until the title is filed. The only time it matters is if you try to back out, then the name on the contract is liable for he associated costs.


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## bautista99 (Mar 23, 2016)

Userkare said:


> I hope you've talked to a good accountant who specializes in tax law about this. If you are going to live in it as your principal residence, that may be a taxable employee benefit. If the house is eventually sold, there will be a capital gain to pay tax on.
> 
> OTOH, If you're going to use it as a rental property, it's probably better that it's in the name of the corporation. I'm not saying you'd be a slum-lord, but if any tenant dispute leads to litigation, your personal assets would be safe.


Thanks. I never plan on living in it and am willing to play the tax on it according to the law. I was just looking for the flexibility to be able to choose either my holding company or myself. The condo is not built yet so things might change down the road when it's finally closing.


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## bautista99 (Mar 23, 2016)

Valor said:


> You may want to include an assignment clause in the purchase & sale agreement, whether to exercise to assign it to your other entity is up to your discretion.



Thanks. Is this the same type of assignment clause that people are using to assign to a completely separate person?


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## Mortgage u/w (Feb 6, 2014)

bautista99 said:


> I never plan on living in it and am willing to play the tax on it according to the law. I was just looking for the flexibility to be able to choose either my holding company or myself. The condo is not built yet so things might change down the road when it's finally closing.


If this condo unit is your only rental property, its definitely not worth opening up a corporation to hold it. The costs outweigh the advantages, especially that condos are not that profitable to begin with. 

Aside from the costs to maintaining a corporation, you lose out on a great benefit when you sell - 50% capital gain exemption. Under the corporation, you do not have this benefit - 100% of the gain will be taxed at a corporate level.

On a personal level, you still get the benefit of writing off expenses against the income. I don't recommend the corp - unless you own or plan to own several rental properties.


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## Valor (Jan 15, 2017)

bautista99 said:


> Thanks. Is this the same type of assignment clause that people are using to assign to a completely separate person?


Yes, wording will be something like you have the right upon your sole discretion to assign to this contract another party, be it individual or entity. so whichever name you used first (corporate or personal) you can assign to each other when it comes to closing, or even assign it away to someone else. please check with a lawyer for the exact wording for your benefit.


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## corporatefinance (Feb 17, 2017)

it's really up to the banks / lenders not the developer... we used our personal names but know many people who used corporate names. Corporate name is a great way to get around a "no assignments" rule if you need to sell it before the development is finished


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