# Vacation home - buy it personally or with corporation's retained earnings?



## vi123 (Oct 29, 2015)

This is a bit of a followup to the thread that I posted re buying a vacation home in Whistler.

We have some retained earnings in our holding company, so we're wondering if we should use that money to buy the property? Or buy it with our own money instead?

Here are a few positives and negatives that I can think of:

*Using holdco's retained earnings*
+++ We buy it with pre-tax money
+++ It wouldn't be a primary residence so we're not worried about losing the principal residence capital gains exemption
+++ Any liability issues would be confined to the holdco, rather than our personal wealth 
----- Would our own personal use of the property count as a taxable benefit?

*Buying personally*
+++ We have the property in our own name
+++ Easier to get a mortgage (although we're not 100% decided yet if we'll get a mortgage)

I'm leaning towards buying with our own money. It just seems to be the easier option and will give us more flexibility with financing in the future. It also avoids any potential arguments with CRA. 

Have I missed anything? Any thoughts?


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## Cal (Jun 17, 2009)

I am sure a quick phone call to your accountant could really help you come to a better conclusion for your business/personal situation.


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## NorthKC (Apr 1, 2013)

^^ AGree on the above.

If you have it in holdco - then personal use definitely counts as a taxable benefit.


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## vi123 (Oct 29, 2015)

I'm thinking that a few trips to visit the property might be allowed to check that everything is working, do some renovations etc. I'll check with my accountant. Still not decided on this.


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## CPA Candidate (Dec 15, 2013)

I don't really see the advantage of the corporation buying the house. None of the expenses related to it would be deductible, they are not used to produce revenue. Use of the house would likely result in paying tax on the "free" benefit of use (which is still coming out of your pocket, in a sense, from the corporation). Moreover, if the corp ran into trouble, it could be used to settle debts.


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## vi123 (Oct 29, 2015)

CPA Candidate said:


> I don't really see the advantage of the corporation buying the house. None of the expenses related to it would be deductible, they are not used to produce revenue. Use of the house would likely result in paying tax on the "free" benefit of use (which is still coming out of your pocket, in a sense, from the corporation). Moreover, if the corp ran into trouble, it could be used to settle debts.


Sorry I should have been more clear. We would be renting the vacation home out for most of the year via Airbnb or something similar. It would be cashflow neutral, even after property management fees and a bit of personal use.


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## eribruski (Feb 4, 2016)

Buy it with the trust and write off your travels to and from Whistler. Liability and debt is not an issue. If times ever get tough at the company "gift" the house to yourself in advance.


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