As of October 1, 2020, Ontario realtors can now incorporate and achieve valuable tax deferrals (and potential income-splitting) through their wholly owned corporations.
A Personal Real Estate Corporation (“PREC”) can receive remuneration directly from the brokerage and pay income tax at the lower corporate tax rates (12.5% in Ontario on the first $500,000 of profits). The salesperson or broker must be the sole director, officer and sole voting shareholder of the PREC. Family members who are not registered with RECO can also be shareholders but must hold non-voting shares. This can be useful for certain tax planning and income-splitting where appropriate.
Our team at HS & Partners can help with tax planning and setting up your corporate accounting records to ensure you maximize every benefit and opportunity. Our affiliate law firm, Vaknin Law, can incorporate the PREC and constitute the Minute Book, as well as review and provide feedback on the requisite Agreement between the PREC and the brokerage.