Selling as Corporation or Individual
You will be taxed when you sell a real estate property.
There is some difference between selling as individual and corporate.
Tax rate would be:
39% (30% income tax & 9% residential tax) of the profit from sales for an individual if the length of holding the property is less than 5 years on January 1 of the sales year.
20% (15% income tax & 5% residential tax) of the profit from sales for an individual if the length of holding the property is more than 5 years on January 1 of the sales year.
26-41% will be taxed to corporations for any length of holding.
Tax rate for short term transfer is really high. If the length of holding a property is almost 5 years, you should hold on to it until 5 years has passed to apply 20% instead when you sell.
On the other hand, for corporate tax rate is low for any less than 8 million profit and 30% will be applied if profit is more than 8 million. Just by looking at this it seems better to sell as individual.
However a company takes all kinds of profit to calculate tax for the fiscal year. If there are some losses, you can offset them with rental profit. In addition a company has a special benefit that they can offset their loss for 7 years.
Selling the property is better as long as these calculations are done beforehand.
There are some hidden tricks when it comes to selling a property.
We’ve listed some tricks in the behind the scene page.