One of the key considerations for anyone involved in commercial real estate in Canada is tax strategy. With the right approach, it’s possible to significantly reduce your tax burden and maximize your return on investment. Here are some tax strategies to keep in mind when financing commercial real estate in Canada:
Utilize Capital Cost Allowance (CCA) – CCA is a tax deduction that allows you to write off the cost of depreciable assets over time. For commercial real estate, this can include everything from the building itself to equipment and fixtures. By taking advantage of CCA, you can reduce your taxable income and keep more of your profits.
Consider a Limited Partnership – Limited partnerships are a popular choice for financing commercial real estate in Canada because they offer significant tax advantages. In a limited partnership, the general partner is responsible for managing the property, while the limited partners provide the financing. By structuring your investment in this way, you can take advantage of the general partner’s tax deductions and offset your taxable income.
Use the Small Business Deduction – If you’re a small business owner financing commercial real estate in Canada, you may be eligible for the small business deduction. This allows you to deduct up to $500,000 of your business income from your taxable income, effectively reducing your tax burden.
Take Advantage of Tax Deferral – Another useful tax strategy for commercial real estate financing in Canada is tax deferral. By deferring your taxes, you can keep more of your money invested in the property and potentially increase your returns over time.
Of course, tax strategy is just one aspect of commercial real estate financing in Canada. To ensure that you’re getting the best possible financing deal, it’s important to work with experienced professionals who understand the ins and outs of the market. That’s why it’s crucial to have a team of trusted advisors, including commercial real estate agents, property managers, accountants and real estate attorneys to guide you through the process.
At Gilko Capital, we specialize in providing financing solutions for commercial real estate borrowers in Canada. Our team of experts can help you navigate the complex landscape of tax strategy and financing options to ensure that you’re getting the best possible deal for your investment. Contact us today for commercial real estate financing and tax strategies and learn more about how we can help you achieve your financial goals.
