of the corporation in exchange for the property. The share consideration must have a fair market value that is equal to or greater than the fair market value of the property being transferred. 4. Restrictions on shares: The shares issued as consideration must be of the same class and series as the shares issued to other shareholders of the corporation. The shares cannot be redeemable or retractable and cannot have any special rights or privileges. 5. Reporting requirements: The transferor must file a Form T2057 with the Canada Revenue Agency (CRA) to report the transfer. The corporation must also file a Form T2058 to report the share issuance. 6. Time limit: The transfer must occur within a specified time limit. The transferor must transfer the property to the corporation and receive the shares within 60 days of the date that the transferor and the corporation agree to the transfer. 7. Restrictions on subsequent disposition: The transferor cannot dispose of the shares received in the rollover for a period of at least two years. It's important to note that the Section 85 rollover can have complex tax implications, and it's recommended to consult with a tax professional before considering this type of transaction. Let’s say you have a property you bought for $100,000. Ten years pass, and now it’s worth $150,000. You have a $50,000 capital gain. Break it up in between capital gain and depreciation recapture however you want. You’re still going to have to pay tax on that $50,000. So, when you pay tax on that $50,000 of capital gains, you’re going to have less money you can reinvest. What a section 85 allows you to do is transfer the ownership of a personally owned property to a corporation in exchange for
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