Save Big On Rental Income Taxes with a Management Corporation Strategy

Real estate investors know that paying taxes on rental income can be a heavy hit to profits. With rental income classified as passive in Canada, it faces one of the highest corporate tax rates—up to 50%.

The good news? There’s a strategy some investors use to lower that tax bill substantially. It involves creating a second corporation that provides management services to your rental properties, allowing for a lower active business income tax rate.

Here’s a step-by-step guide to how this structure works and how it could cut taxes on your rental income.

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