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Choosing to rent or purchase is a very personal decision depending on your short and long-term plans, as well as your cash flow and level of comfort in managing your debt. It may also depend on your career stage or practice or business ownership.

Many professionals choose to rent even after they enter practice or set up their business. One advantage to renting is it may give you the flexibility to change your location and time to decide where you will settle down. 

Opting to purchase a home could require a large upfront cost — as well as the ups and downs of housing prices in the short term That means it may be unwise to buy unless you plan to keep the home for several years at minimum or if you plan to use it as an investment.

When considering to purchasing a home, there are several factors to consider when choosing a mortgage.  In addition to how much can you afford, there is the question of fixed versus variable rates, an open versus a closed term, the payment options, and much more.  A Scotiabank Healthcare Specialist and Home Financing Advisor can help you map out your goals, explain the different features of a mortgage, and find a customized solution to suit your specific needs.

Before making a decision to buy or lease, there are a number of factors that you may want to first consider. A big part of your decision will depend on the marketplace — what commercial space is currently available in the neighbourhood where you want to establish your practice or business and is it for lease or sale? With leasing, there is lower upfront investment as you build your practice or business in the early years; however, there is the possibility that your landlord will sell the property, resulting in having to relocate. In addition to unforeseen set-up and relocation expenses, it can be costly if you need to relocate to a different part of the city as patients may not move with you. In this case, you may have to rebuild your patient or client base. 

Purchasing your own commercial property could help mitigate business risks like this down the road. It can also turn into a valuable investment and a significant asset upon entering retirement. Depending on your comfort level and other financial circumstances, you could consider becoming a landlord leasing to another professional. You could also sell the asset, which may have appreciated in value, or pass you could pass it on to your children or other family members. 

A Scotiabank Healthcare Specialist can help you evaluate your options and provide advice to help you make the best decision for you and your situation.

Based on your specific needs, there are a variety of business banking solutions to consider when incorporating.  You might only require an operating account and business credit card to allow you to separate your business expenses from personal expenses. Or you may have more complex needs that include financing building purchases, leaseholds, equipment, merchant and payroll services or a business line of credit to assist in managing cash flows.

Scotiabank Healthcare Specialists understand the unique financial needs of starting and managing a practice or business and can provide expertise and tailored solutions to manage your professional finances.

If you’re a healthcare professional who has incorporated your practice or business, the general advice you may have received in the past from tax experts was likely to retain any and all earnings you don’t need within your corporation. This strategy might be relevant for some professionals who are building their wealth — but with taxation changes, a more balanced approach might be warranted depending on your financial circumstances. 

You might be affected by the passive income rules, in which case a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA) can help you retain more of your income. Work with your tax advisor to understand the tax benefits of all of these strategies. Share your goals with them so they can help you minimize your overall tax liability with the big picture in mind.

When you begin to draw income in retirement, there are different tax consequences for each source of funds. For instance, withdrawals from your registered retirement savings plan (RRSP) and registered retirement income fund (RRIF) and Canada Pension Plan/Quebec Pension Plan (CPP/QPP) payments are currently taxed as income.

Your personal portfolio of investments and your corporate investments (if you’re incorporated) are taxed according to the type (e.g., interest, dividends, capital gains). There is no tax when you withdraw funds from your tax-free savings account (TFSA).

Your Scotiabank Advisor can refer you to our team of Wealth specialists who can help you navigate these tax minimization decisions and share some strategies around income maximization and estate planning.