Should Someone Else be the Owner of Your Office?
Buying your own dental office can be a great investment.  There is no need to renegotiate with your landlord periodically on the terms of the lease.  You will enjoy the growth of the real property that could very well become part of your retirement assets.  And with the 1 per cent GST reduction effective July 2006, the cost to acquire the property will be slightly reduced.

Who should be the owner of your property?  Here are some options:

1. You the dental professional – assuming that you do not have a professional corporation or a hygiene/technical corporation.
2. Your spouse, significant other or your parents.
3. Your professional corporation and/or hygiene/technical corporation.
4. A separate corporation.


What are the advantages and disadvantages of each of these options?

> Individual (Dental Professional)

Advantages:
1. No rent payable and no GST payable on the monthly rent.
2. The property becomes part of your retirement nest egg.
Disadvantages:
1. Generally, GST must be paid on the purchase at the time of closing and it is not refundable – it simply becomes part of the total real property cost;
2. Not creditor proofed (i.e., if you ever get sued, the creditor may seize the property).
3. Finance the purchase with your personal after tax dollars (53.6 per cent).


> Other Individuals

Advantages:
1. No GST payable at time of purchase if the purchaser has registered for GST;
2. Creditor proof – the property is not under your name and therefore even if you get sued, the creditor is not in a position to touch the property;
3. Possible to finance the purchase with cheaper tax dollars than yours.
Disadvantages:
1. GST is payable on the monthly rent and property taxes;
2. Failing GST returns requires more administrative work .


> Professional, Hygiene/Technical Corporations

Advantages:
1. Finance the purchase with cheap tax dollars (81.38 per cent);
2. No rent payable and no GST payable on the monthly rent.
Disadvantages:
1. GST must be paid for the purchase at the time of closing and is not refundable – it simply becomes part of the total real property cost;
2. If you sell the shares of your corporation, the property will be sold as well if you did not transfer it out of the corporation prior to the sale.


> A Separate Corporation (Holding Company)

Advantages:
1. No GST payable at time of purchase if the purchaser has registered for GST;
2. Creditor proof – the property is not under your name and therefore even if you get sued, the creditor is not in a position to touch the property.
Disadvantages:
1. Finance the purchase with the corporate after tax dollars (51 per cent);
2. GST is payable on the monthly rent and property taxes;
3. Filing GST returns requires more administrative work.


Typically, it is more beneficial to take advantage of the cheap tax dollars to finance the purchase by using a professional, hygiene or technical corporation as the purchaser.  However, everyone’s financial goals and situations are different and therefore it is advisable to consult your financial advisor to make an informed decision.