_ Real Estate Professionals

Personal Real Estate Corporations


_ PREC

Do you need a PREC?

Bill 145 came into effect in October 2020. Real Estate Professionals in Ontario can now operate under a Personal Real Estate Corporation or PREC. PRECs provide realtors with several benefits.


_Should you incorporate?

PREC Benefits

Build Wealth Faster

Lower corporate tax rates allow you to reinvest more savings and compound your wealth accumulation.

Reduce Taxes

Take advantage of tax deferrals, income splitting and other tax strategies.

Avoid CPP/EI Contributions

Immediately increase your current income by avoiding CPP/EI contributions.

Protect Personal Assets

Limited liability allows you to protect your personal assets from lawsuits.


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    _Should you incorporate?

    PREC vs. Sole Proprietorship

    _PREC
    _Sole Proprietorship
    Protect Personal Assets
    12.5% Small Business Tax Rate
    Income Splitting Opportunities
    Avoid CPP/EI Contributions
    Build Wealth Faster

    PREC

    PREC

    • Protect Personal Assets
    • 12.5% Small Business Tax Rate
    • Income Splitting
    • Avoid CPP/EI Contributions
    • Build Wealth Faster
    PREC

    Your Current Practice

    • Protect Personal Assets
    • 12.5% Small Business Tax Rate
    • Income Splitting
    • Avoid CPP/EI Contributions
    • Build Wealth Faster
    The personal tax rate of 53.53% is the highest marginal rate for personal income in Ontario. Tax rates vary based on your income. Your personal tax bracket can be anywhere between 20% - 53.53%. It is important to discuss your situation with a tax attorney before making a decision.
    _ PREC

    Frequently Asked Questions

    1What are the tax advantages of operating under a PREC?
    You can take advantage of the reduced 12.5% corporate tax rate on the first $500,000 of profit every year. You also benefit from additional savings on partially deductible expenses. Income splitting can further increase tax benefits!
    2Is a PREC the same as a normal corporation?
    In addition to general corporate laws, PRECs must abide by additional regulatory requirements. These requirements are set out in BIll 145 and accompanying provincial regulations. A PREC cannot operate the same as a typical corporation however they offer many of the same benefits.
    3Can I transfer property and earn upcoming commission inside my PREC?
    Yes! There are tax tools to help you easily transition into a PREC. A Section 85 Rollover application allows you to transfer assets on a tax deferral basis. The right plan depends on your circumstances.
    4Is a PREC right for me?
    It depends! In our experience, a PREC can benefit realtors earning at least $50,000. However, the specific advantages and benefits are dependent on your particular situation.
    5Can I use my PREC for other business?
    You may use your PREC to carry on other business. However, there only you can operate as a real estate professional under your PREC. Another realtor cannot operate under your PREC.
    6Does the PREC allow for income splitting?
    Yes. The PREC regulations allow family members (defined broadly to include blended families), being children, parents and spouses, to own non-voting, non-equity shares of the PREC. The PREC can thus allocate its business income to employees (including the controlling Registrant, family members and others) as salary and issue dividends to any shareholder of the PREC.
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