New rules allow for brokerages to pay funds owed for trading in real estate to a corporation.
On October 1, 2020, the Ontario Government announced a radical change related to the Real Estate and Business Brokers Act, 2002, through the Trust in Real Estate Services Act, 2020, (TRESA), which is designed to update real estate legislation to reflect today’s real estate market. The new measures include changes that align real estate brokerages and professionals more closely with modern business practices, including allowing real estate professionals to incorporate and be paid through Personal Real Estate Corporations (PRECs). The PREC allows real estate agents to operate in a similar fashion to dentists, lawyers and doctors who can take advantage of numerous tax planning opportunities, flexibility in income, and tax effective investments. This article provides a brief overview of how a PREC must be set up, along with the advantages and disadvantages of incorporating, which may change based on individual circumstances. If you are interested in discussing the merits and considerations of a PREC and how to maximize the benefits thereof given your specific circumstances, please contact us for expert advice and guidance.
A PREC has specific activities and restrictions that must be followed including:
Benefits of a PREC include:
Considerations of a PREC may include:
Obtaining professional advice based on your particular facts and circumstances is important to ensure that your PREC has been optimized. Please contact your Bateman MacKay Business Advisor with any questions you may have.
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