Buying share in Toronto area pharmacy
By John R Mott | November 5, 2009
I am buying 50 per cent of the shares in a pharmacy in Toronto, I am looking for advice on the following: 1) Shall I buy shares or assets given that the pharmacy shareholders now bought it as a share transactions.
2)I am assuming 50 per cent of the current loan and adding another 300K as a second loan (maybe personal) that the pharmacy corporation will assume. Can I write off the interest on the additional 300K from my tax and what is the implication from the tax prospective.
John R Mott answered:
There are pros and cons to buying shares vs assets. Generally the purchaser has a bias for assets and the seller has a bias for shares, and the final outcome is a matter of negotiation and price. It should certainly be possible to structure the loan so that the interest is deductible but, again, with the proper advice. Appropriate advice is very fact dependent in these matters.