Personal Real Estate Corporation (PREC)

Real estate agents in Ontario have recently won the right to incorporate. Several provinces across Canada have allowed real estate agents have been able to incorporate for several years, but Ontario did not. This recent bill allows Ontario realtors to form their own corporation called Personal Real Estate Corporations (PREC). This means real estate agents will be able to reduce their tax bills through the low corporate rates and take advantage of all of the benefits of incorporating.

What it offers

  • Provides realtors the benefits of being a corporation
  • Income earned from your sales will be paid to the PREC
  • Income not used in the year will be taxed at the corporate level
  • Ability to hold investments in property within a corporation

Limitations

  • The PREC will not be associated with the public as trading in real estate. The agent will remain as the realtor.
  • There can only be one controlling shareholder.

Doesn’t a corporation have extra costs?

Incorporating does have more administrative costs than a sole proprietor as annual statements & an updated minute book are required; however, the tax savings far out way the fees.

How to set one up.

  1. Discuss with your brokerage on if they will work with a PREC
  2. Talk to an accounting professional who can help you decide if a PREC is right for you.
  3. Your accounting professional & lawyer will handle the paperwork
  4. Draft a new agreement with the brokerage
  5. Notify RECO of the PREC’s legal name and address for service

Benefits of incorporating

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Lower your 2020 tax bracket

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Transfer 85% of deals in process to the corporation

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Reduce your 2020 tax bill

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Reduce installment payments

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Lower tax on excess cash to 12.02%

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Invest excess cash in income producing assets

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Possibility to split income with your family

Is incorporating right for you?

  • Do you have income in excess of your needs?
  • Do you anticipate increasing your sales?
  • Are you a realtor with excess funds looking to invest in real property?

If you answered yes to any of the above, we can help you incorporate and navigate the administration process.

Address

O'Keefe Accounting Group
160 Walton Street,
Port Hope, ON  L1A 1N6

Phone: (905) 800-0909
Email: info@okeefecpa.ca