Investment

Millennium 3 - Tax Advantage

Tax Advantage

Our projects are structured to deliver significant tax advantages to investors. Approximately half the cost of the investment may be deducted from pre-tax income in the first year, with additional, lesser write-offs in subsequent years.

This is possible because our projects are offered as limited partnerships. Costs associated with syndication and upgrading of the property flow through to the investors as a 100% tax write-off. Capital Cost Allowance (CCA) may also be claimed to reduce or eliminate taxable income from the project.

Investments in limited partnership units can also be used to facilitate income splitting, intergenerational wealth transfer, and estate planning. A high income earning individual can take advantage of tax write-offs in the early years of the project and then, at the appropriate time, transfer the unit to a spouse, partner, or child in a lower tax bracket who can receive the income. Units may also be transferred to a trust at the optimal point, after tax write-offs have been taken, to minimize future capital gains tax while still allowing an income stream and assets to be passed to a child, grandchild, or other beneficiary.

These investments are an excellent alternative, or supplement, to RRSP-eligible investments in that they afford additional tax relief over and above what is available with an RRSP, and provide long-term income into retirement. More importantly, these investments are not subject to some of the disadvantages of RRSP-held investments.

make your money
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  • Significant tax relief
  • Opportunities for income splitting
  • An excellent vehicle for intergenerational wealth transfer
  • Favourable tax treatment in comparison with RRSPs

Tax circumstances differ for each individual and tax rules are subject to change. The information presented here is a general tax commentary that may not apply in every case. Always seek advice from a professional tax advisor when considering investments for tax planning.

RRSP
Interest on money borrowed to invest in RRSPs is not tax deductible.

Capital gains and dividends lose their special treatment when held inside an RRSP, and are subject to taxation on the full value when the proceeds are withdrawn.

RRSPs must be converted at age 71 to RRIFs.

RRIFs require a minimum annual withdrawal. Capital eventually depletes.

100% taxable
The entire principal invested in an RRSP or RRIF is considered as income and subject to income tax in the year of the holder’s death (except where the RRSP or RRIF is transferred to a partner or spouse).

Limited Partnership Unit
Interest on money borrowed to invest in limited partnership units is tax deductible.

Capital gains have preferential tax treatment – taxes only apply if the property is sold or otherwise disposed, and are applied to only 50% of the increase in value since the property was purchased.

Real estate ownership has no time limit.

Income from ownership in a property does not decrease over time but actually increases, often ahead of inflation. No depletion of capital – the underlying value of real estate grows.

50% taxable
Only 50% of the difference between fair market value and the adjusted cost base is taxable as capital gain upon death. This may be avoided if the unit is transferred to a partner or spouse.

RRSP Limited Partnership Unit
Interest on money borrowed to invest
in RRSPs is not tax deductible.
Interest on money borrowed to invest
in limited partnership units is tax deductible.
Capital gains and dividends lose their special treatment when held inside an RRSP, and are subject to taxation on the full value when the proceeds are withdrawn. Capital gains have preferential tax treatment – taxes only apply if the property is sold or otherwise disposed, and are applied to only 50% of the increase in value since the property was purchased.
RRSPs must be converted at age 71 to RRIFs. Real estate ownership has no time limit.
RRIFs require a minimum annual withdrawal.
Capital eventually depletes.
Income from ownership in a property does not decrease over time but actually increases, often ahead of inflation. No depletion of capital – the underlying value of real estate grows.
100% taxable
The entire principal invested in an RRSP or RRIF is considered as income and subject to income tax in the year of the holder’s death (except where the RRSP or RRIF is transferred to a partner or spouse).
50% taxable
Only 50% of the difference between fair market value and the adjusted cost base is taxable as capital gain upon death. This may be avoided if the unit is transferred to a partner or spouse.