Incorporating Real Estate Business in Ontario
Did you know that you can now incorporate your real estate business in Ontario?
On October 1, 2020, the Government of Ontario’s amendments to the Real Estate and Business Brokers Act, 2002 (“REBBA”) came into force, which now makes it possible to operate your real estate business through a Personal Real Estate Corporation (“PREC”.)
There are numerous advantages to incorporating your business. There are also several restrictions and considerations specific to owning and operating a PREC. Ford Keast LLP would be pleased to discuss your situation and help determine whether a PREC is right for you.
Highlights of a PREC:
- A PREC receives a broker’s or salesperson’s remuneration, which means commissions will be taxed at corporate income tax rates rather than personal income tax rates. Personal tax will be incurred when the broker or salesperson takes funds from the PREC.
- With proper tax planning, using a PREC can result in some immediate tax savings and/or deferral of income tax. Ford Keast can help devise a personal compensation plan (salary, dividends, and so on) that is most effective.
- If you already own a private corporation, you may be able to use it as your PREC. This saves the cost of incorporation and speeds up your transition.
- REBBA contains restrictions on share ownership and activities of a PREC, including how a PREC invests its profits. Ford Keast can help ensure your PREC is properly structured.
- The broker or salesperson remains the Real Estate Council of Ontario (“RECO”) registrant and insured professional. The PREC itself does not carry on any trading in real estate.
Contact your Ford Keast Representative for more information. Click here for a PREC checklist provided by RECO that may answer some of your questions: