| Registering a corporate entity can seem like a daunting | | | | standard corporation, stocks in the company can be |
| task for the novice real estate investor, but it is an | | | | issued to attract more investors, and members can |
| important step to take to ensure proper legal functions | | | | often do some income splitting to reduce overall taxes. |
| for your present and future condo conversions. As | | | | In an LLC however, stocks cannot be issued and |
| confusing as condo conversion law may seem, | | | | income splitting cannot be practised. Members can, |
| however, it is not a task you have to accomplish alone. | | | | however, report their share of the profits and losses |
| In fact, it is not a task you should even consider doing | | | | of the company on their personal income tax. Most |
| without the help of a good real estate attorney. | | | | real estate investors considering condo conversions |
| The requirements for setting up a corporation vary | | | | generally form an LLC. |
| widely from state to state and internationally. | | | | A legal term that you will likely hear as you proceed is |
| Corporations are even called by different names | | | | quitclaim. Once your corporation is created, you will file |
| depending on where you live. Regardless of what it is | | | | a quitclaim to transfer the title of the property to the |
| called, your lawyer can walk you through the steps | | | | corporation. In a nutshell what you are doing is "quitting" |
| and offer solid business advice as you go. Basically | | | | any personal ownership of the building and deeding it |
| though, these are the tasks involved with setting up a | | | | to the corporation. By doing so, you are also keeping |
| legal corporation for a condo conversion venture. | | | | yourself free of any liabilities on a personal level. For |
| You must register with the governing body of your | | | | example, should the project run into difficulties |
| area that regulates taxes and revenues. In the United | | | | financially, your personal assets will not be at risk. |
| States, this is the IRS. In Canada, it would be the | | | | From this point forward, the workings of your condo |
| Canada Revenue Service. The application will ask for | | | | conversion project will proceed through the |
| the details of your company and the principals involved. | | | | corporation. In some areas much of the work can be |
| You will list your company as a newly formed entity | | | | accomplished quickly and easily online, but as |
| and register it according to the type of partnership you | | | | mentioned previously, a lawyer can handle all of the |
| are forming. | | | | tasks, leaving you free to focus on the many other |
| An LLC is different than a standard corporation and | | | | details of your condo conversion that will require your |
| there are advantages and disadvantages to both. In a | | | | attention. |