Can my corporation, buy my house, will the bank give my corporation a mortgage to buy my home?

Question

Can my corporation, buy my house, will the bank give my corporation a mortgage to buy my home?

Answer 1

This is wrong, foolish and illegal in most circumstances.

The IRS (or Canadian equivalent) will most likely assume you are mixing personal and professional assets, which is a prosecutable offense. The corporate veil can and will be pierced for this purpose and you will be fined.

As for the bank giving your corporation a mortage, that is theoretically possible, but practically unlikely. Your company might have enough assets as collateral, but it will not qualify for any of the tax breaks given to homeowners. In addition, corporate mortage rates are likely higher as well.

If the bank were to agree to such a scenario, your net costs would be significantly higher. Plus, if the authorities fine you for mixing your assets and if your company becomes strapped for cash, it may be forced to sell your house.

On the other hand, if you were ever to go bankrupt, the legal system would permit you to remain in your home at least until all proceedings have finished.

It's safer to stay 'legal.'

Answer 2

Simple put, yes.

Answer 3

It all depends on your corporations earnings, profitability, credit rating, outstanding loans or bills and ability to repay the mortgage.  That is assessed at the time of the mortgage application.

Answer 4

One of the reasons we form corporations is to shield our personal assists from our corporate assists. If your corporation was able to purchase your house, and lease it back to you, if the corporation was in trouble, the creditors or court could take the house.

Not a good idea!