Rental Property Liability Protection: Corporation vs Personal Name

Here’s a question that comes up all the time: Should you buy your rental property in a corporation or in your personal name?

Both options have their benefits and drawbacks. The right choice depends on your situation, your investing goals, and what you’re trying to accomplish. Let’s break down what you need to know.

The Big Benefits of Buying in a Corporation

Your Credit Bureau Stays Clear

This is huge. When you buy properties in a corporation, those mortgages don’t show up on your personal credit report.

Here’s why this matters: Some residential lenders don’t even look at corporate mortgages when they’re checking your application. They basically ignore them completely.

So you could buy several properties in your corp, max out what those lenders will give you, and then start fresh with lenders who only count personal mortgages. Then do it again. You can see how this lets you keep growing your portfolio way beyond normal limits.

Extra Protection if Things Go Wrong

When you own property in a corporation, you get an extra layer of liability protection.

If someone sues you over something related to that property, they can only go after what’s in the corporation. Your personal assets stay separate and protected.

Now, you can also buy liability insurance to protect yourself when you own properties personally. But the corporate structure gives you built-in separation between your business and personal life.

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The Downsides You Need to Know About

Higher Interest Rates

This is the big one. You’ll typically pay higher interest rates when you buy in a corporation.

It’s not that lenders specifically charge more for corporate ownership. The problem is that fewer lenders offer this option.

Before COVID, tons of lenders let you register properties in a corp. Then everything froze during the pandemic. Some have started offering it again, but not all of them.

Think about it this way: If 100 lenders do rental properties but only 10 of them do corporate purchases, you’ve got way less competition. Less competition means you won’t get the absolute best rates available in the market.

Everyone on the Corporation Needs to Be on the Mortgage

Here’s something that catches people off guard. If your corporation has four directors, the lender will want all four directors on the mortgage.

Sometimes people set up a corp and add family members as directors so they can receive some benefits over time. But those family members might not actually want to own real estate or qualify for a mortgage.

This can create problems. Make sure everyone who’s a director in your corporation is willing and able to be on the mortgage for any properties you buy.

What About Bare Trust Agreements?

There’s another option that some investors use called a bare trust agreement.

This lets you close the property in your personal name, but then it’s treated as corporate property for tax purposes with the CRA.

Sounds perfect, right? Not so fast. There are some catches:

• The property is still in your personal name, so you don’t get the liability protection
• Some lenders won’t allow this arrangement at all
• It can get messy when you try to Refinance later

When you go to refinance, the lender asks to see your rental income. But it’s not on your personal tax return because it’s in the corporation. They see the property in your personal name and get confused about where the income is.

Most lenders figure it out eventually, but it adds complications. Talk to your mortgage broker first to make sure your lender is okay with this approach.

The upside? You get access to all lenders and better rates while still getting some corporate tax benefits. Plus, you can potentially avoid triggering land transfer tax when setting it up.

The Tax Question

I’m not an accountant, so you absolutely need to talk to yours about this.

But here’s the thing: Depending on your personal income, it might actually be cheaper tax-wise to keep properties in your personal name. Or it might be better in a corp. It really depends on your specific situation.

Don’t make this decision based only on mortgage qualification or liability protection. The tax implications can be significant either way.

So Which Should You Choose?

There’s no one-size-fits-all answer here.

Buying in a corporation makes sense if you want to keep growing your portfolio beyond normal lending limits and you want that extra liability protection. Just be prepared to pay a bit more in interest.

Buying personally makes sense if you want the best possible rates and you’re not worried about hitting lending limits yet.

And bare trust agreements can work if you want the best of both worlds, but make sure your lender and accountant are both on board first.

The bottom line? Talk to your mortgage broker, your accountant, and your lawyer before you decide. Get all three perspectives so you can make the choice that works best for your situation.

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Frequently Asked Questions

Written by

LendCity

Published

December 22, 2025

Tags

Legal Structure Insurance Credit Tax Strategy Mortgage Basics

Key Terms in This Article

Land Transfer Tax

Land Transfer Tax

A provincial tax paid when purchasing property, calculated as a percentage of the purchase price. Some cities like Toronto add additional municipal tax.

Refinance

Refinance

Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.

Mortgage Broker

Mortgage Broker

A licensed professional who shops multiple lenders to find the best mortgage rates and terms for borrowers. Unlike banks, brokers have access to dozens of lending options.

Interest Rate

Interest Rate

The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.

Cash Flow

Cash Flow

The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.

Hover over terms to see definitions, or visit our glossary for the full list.

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