Save 35%+ on
Your Tax Bill
By Registering

Save 35%+ on Your Tax Bill By Registering A PREC

What is PREC?

A personal real estate corporation, or PREC, allows a real estate
agent to earn their business income through a corporation.

Tax Deferrals

One of the primary benefits to incorporation for a realtor is the ability to defer
income tax.

The tax rate on small business income up
to $500,000 in Ontario is 12.2%. In comparison, personally earned income at $50,000 in Ontario is taxed at 29.65%, which increases with income up to 53.53% for income over $220,000.

Income Splitting

Ontario realtors can name family members as shareholders of their PREC as well, but
the realtor must own all voting shares of the company.

Non-voting shares can be issued to others, and dividends can be paid to them.

Tax Deductions

Realtors can save on tax deduction is specific situations. One is the ability to set up a Health Spending Account (HSA). HSAs allow an incorporated business owner to be reimbursed for personally incurred medical expenses without the withdrawals being treated as taxable income.

Another exception is for corporate-paid retirement counseling. According to the Canada Revenue Agency, “the fees you pay to provide services such as financial counseling or income tax preparation for an employee are usually considered a taxable benefit.”

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Can I advertise using the name PREC?

A registrant may be able to use an existing corporation if it meets the criteria and conditions of a PREC (refer to checklist). There may, however, be limitations with other types of registered businesses that may prohibit its use.