Should You Incorporate Your Real Estate Business in Canada?

Greenell Properties Capital
Apr 24, 2025
2 min read

As your real estate portfolio grows, one of the biggest questions you’ll face is whether or not to incorporate. Many new investors start off buying properties in their personal name, but as they scale, the idea of using a corporation starts to sound more appealing.

So when does it make sense to incorporate? And what are the pros and cons? In this blog, we’ll break it all down so you can make an informed decision.

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Why Some Investors Incorporate

Incorporating means setting up a separate legal entity—typically a Canadian-controlled private corporation (CCPC)—to hold and manage your investment properties. This structure offers several potential advantages:

1. Tax Deferral Opportunities

One of the biggest draws is the ability to leave profits in the corporation, where they’re taxed at a much lower small business rate (around 12–15%, depending on the province) compared to your personal marginal tax rate. This allows you to reinvest your profits and grow your portfolio faster.

2. Limited Liability Protection

When you own property personally, your name is directly on the title—along with all the legal risk. Incorporating separates your personal assets from your investment activity. If someone sues the corporation, your personal finances are generally shielded.

3. Professionalism and Credibility

Using a corporation can give you a more professional image, which may help when working with joint venture partners, private lenders, or even sellers in off-market deals. It shows that you’re treating real estate as a business—not a side hustle.

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The Downsides of Incorporation

Despite the benefits, incorporating isn’t always the right move—especially for new investors or those with only one or two properties.

1. Higher Setup and Ongoing Costs

Incorporating involves legal fees, corporate tax returns, bookkeeping, and annual filing requirements. These administrative costs can quickly eat into your cash flow if your portfolio is still small.

2. Financing Can Be Trickier

Not all lenders finance properties under a corporation, and those that do may require higher interest rates, lower loan-to-value ratios, or personal guarantees. You may have fewer options compared to buying personally.

3. Passive Income Is Taxed Higher

Rental income earned in a corporation is considered passive income, which is taxed at a higher rate (around 50%). You can offset this by actively managing the properties or using a “management company” structure, but this adds complexity.

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When It Makes Sense to Incorporate

You own—or plan to own—multiple investment properties.
You want to reinvest profits and defer personal taxes.
You have high personal income and want to reduce your tax burden.
You’re working with JV partners or private lenders.
You’re building a long-term business—not just buying one or two rentals.

Final Thoughts

There’s no one-size-fits-all answer. Incorporating your real estate business in Canada can offer major advantages—but it comes with trade-offs. The key is understanding your goals, income, and future plans.

Before you incorporate, talk to a real estate-savvy accountant and lawyer. They can help you structure things properly and avoid costly mistakes. At Greenell Capital, we always recommend building the right foundation—because how you own real estate is just as important as what you own.