{"id":3548,"date":"2024-12-11T17:40:07","date_gmt":"2024-12-11T22:40:07","guid":{"rendered":"https:\/\/www.ontariobusinesscentral.ca\/blog\/?p=3548"},"modified":"2025-08-05T17:07:58","modified_gmt":"2025-08-05T21:07:58","slug":"ontario-realtors-can-now-incorporate","status":"publish","type":"post","link":"https:\/\/www.ontariobusinesscentral.ca\/blog\/ontario-realtors-can-now-incorporate\/","title":{"rendered":"Personal Real Estate Corporation (PREC) For Ontario Realtors"},"content":{"rendered":"\n

Originally Published October 22, 2020<\/em><\/p>\n\n\n\n

Since October 1, 2020, realtors in Ontario have been able to create a Personal Real Estate Corporation<\/a> (PREC). This change, long advocated by the Ontario Real Estate Association<\/a> (OREA) and the Real Estate Council of Ontario<\/a> (RECO), brought Ontario in line with many other provinces and professions. From tax savings to liability protection, incorporating can bring significant benefits for those in the real estate industry.<\/p>\n\n\n\n

This blog will guide you through what a PREC is, explain its advantages, and show you how Ontario Business Central can help you get started.<\/p>\n\n\n\n

What is a Personal Real Estate Corporation (PREC)?<\/h2>\n\n\n\n

A PREC is a type of business structure specifically designed for real estate professionals. It lets real estate agents in Ontario<\/a> run an incorporated business. They can still handle real estate transactions through their brokerage while operating under a PREC, meaning realtors can access tax benefits and maintain separation between personal and corporate income.<\/p>\n\n\n\n

Unlike traditional corporations, a PREC comes with specific rules set by RECO. These rules cover things like the name of the corporation to tax on split income. It’s best to review RECO’s rules<\/a> before incorporating.<\/p>\n\n\n\n

Only a realtor registered with RECO<\/a> can be the sole director and controlling shareholder. This realtor must also have an Ontario real estate license.<\/p>\n\n\n\n

Benefits of Incorporating as a Realtor<\/h2>\n\n\n\n

Many realtors wonder how much do real estate agents make in Ontario and whether incorporating can enhance their earnings. Ultimately a real estate agent salary in Ontario is often based on the area you are working.<\/p>\n\n\n\n

Tax Advantages<\/h3>\n\n\n\n

Ontario Realty Corporations allow you to take advantage of corporate tax rates, which are significantly lower than personal income tax rates. The base personal tax rate in Ontario can exceed 29%, while corporate rates are around 13%. This difference can have a notable impact on a realtor salary in Ontario. By keeping income within the corporation, realtors can defer personal taxation until they withdraw funds, creating opportunities for long-term tax savings.<\/p>\n\n\n\n

Liability Protection<\/h3>\n\n\n\n

While liability protection for a Personal Real Estate Corporation in Ontario is limited compared to other types of corporations, it still provides some separation between personal and business assets. This can be beneficial in certain legal scenarios involving real estate transactions.<\/p>\n\n\n\n

Income Management<\/h3>\n\n\n\n

By managing cash flow in your business, you can plan for large expenses. You can also reinvest in your company or save for future opportunities. This flexibility is a significant advantage over sole proprietorships.<\/p>\n\n\n\n

Considerations Before Incorporating<\/h2>\n\n\n\n

While the benefits of a Personal Real Estate Corporation are clear, it\u2019s important to weigh the costs and responsibilities:<\/p>\n\n\n\n

Higher Setup & Maintenance Costs<\/h3>\n\n\n\n

The cost of incorporation is higher than registering as a Sole Proprietorship<\/a>. Additionally, you\u2019ll need to file separate corporate tax returns, which may require hiring an accountant. These expenses are ongoing and should be factored into your decision.<\/p>\n\n\n\n

Increased Administrative Work<\/h3>\n\n\n\n

Incorporation brings more paperwork. Keeping a well-organized Minute Book<\/a> and detailed records is essential. You\u2019ll also need to stay compliant with RECO and file corporate documents yearly.<\/p>\n\n\n\n

\"register<\/a><\/figure>\n\n\n\n

Steps to Incorporate a Personal Real Estate Corporation<\/h2>\n\n\n\n

Becoming a real estate agent in Ontario and connecting with a realtor firm or real estate brokerage is encouraged before you proceed with registering your PREC Real Estate Corporation. Additionally, you must obtain your real estate license in Ontario.<\/p>\n\n\n\n

If you\u2019re already a licensed real estate agent working for a real estate broker, here\u2019s how to get started:<\/p>\n\n\n\n

Step 1: Name Your PREC<\/h3>\n\n\n\n

One difference between a PREC vs corporation is your PREC must follow naming guidelines set by RECO. The name will not be used for advertising, due to this it must not imply it is a brokerage.<\/p>\n\n\n\n

Step 2: Prepare Incorporation Documents<\/h3>\n\n\n\n

To file for incorporation, you\u2019ll need to complete the Articles of Incorporation for a Professional Corporation.<\/a><\/p>\n\n\n\n

The corporate share structure for a PREC requires precise wording to meet requirements. These include:<\/p>\n\n\n\n