Can I set up a PREC as an Ontario realtor?
Yes. Since October 1, 2020, Ontario Regulation 536/20 under the Real Estate and Business Brokers Act (REBBA) permits a Realtor registered with the Real Estate Council of Ontario (RECO) to incorporate a Personal Real Estate Corporation (PREC). Commission income flows to the PREC, unlocking corporate tax-deferral and non-voting family shareholder income splitting (subject to TOSI).
PREC requirements under O. Reg. 536/20. The corporation must: (1) be incorporated under the OBCA or CBCA, (2) have all voting shares owned by the Realtor (the Controlling Shareholder), (3) have non-voting shares owned only by the Realtor, the Realtor’s spouse, child, parent, or a trust for a minor child of the Realtor, (4) be registered with the brokerage as receiving commissions, (5) have the Realtor as sole director and officer, (6) not carry on any business other than remuneration for services of the Realtor as a Registrant.
Tax benefits. Deferred tax on retained commission earnings: about $220,000 to $270,000 of annual tax deferral per $500,000 of net commissions. Combined 2026 SBD rate 12.2% vs. Ontario top personal rate 53.53%. Income splitting with adult family members via non-voting shares – TOSI-constrained but useful for spouse-retirement fact patterns.
Setup steps. (1) Incorporate the numbered corp with PREC-compliant articles. (2) Register with your brokerage as the payee for commissions – most Ontario brokerages have an internal PREC-onboarding form. (3) Notify RECO of the PREC arrangement (no RECO fee, informational only). (4) Update HST registration and open a PREC bank account. (5) Coordinate with your CPA for a T2 opening balance sheet.
Note: A PREC cannot invoice commissions directly to sellers or buyers; commissions flow through the brokerage, and the brokerage remits to the PREC. Bypassing the brokerage violates REBBA.
Source: reco.on.ca â Personal Real Estate Corporations
— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA
Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.