Sell the Building, Not the Business

by M. Will Fischtein

What to do when selling the real estate you own but keeping the business that occupies it?

If you work in a building you own and you’re thinking about selling, you may want to consult a tax lawyer to take advantage of a tax scheme available to Canadians on a disposition or sale.

For example, if your business is a corporation that owns and actively uses all, or most, of the real estate, when it comes time to sell the business, the real estate can also be sold.

In such cases, both the business and real estate would qualify for the Lifetime Capital Gains Exemption (LCGE) of $750,000, under a qualified small-business corporation share sale.

Depending how the ownership of the shares was structured (say, for example, ownership is divided between yourself, your spouse and your two children), you may each be able to claim the $750,000 tax exemption ($750,000 times four), which equals $3,000,000 tax free.

There are many ways to manage your business real estate, but dealing with how the real estate is treated from an operational standpoint will ensure your business operation runs smoothly, profitably and professionally.

M.. Will Fischtein, JD, MBA, CBI is president and broker of record of Beacon Corporation, Brokerage in Toronto.