PREC vs Regular Corporation in Ontario: Which Is Better for Real Estate Agents?
Whether a Personal Real Estate Corporation and a regular Ontario corporation can be treated as interchangeable for a licensed real estate agent, and when incorporating actually pays off. ● Quick Answer A Personal Real Estate Corporation (PREC) and a regular Ontario corporation are both corporations, but they do not serve the same purpose for a licensed real estate agent. A PREC must meet Ontario’s specific ownership, control, brokerage agreement, and remuneration requirements before it can receive eligible real estate remuneration. A regular corporation does not qualify simply because it has been incorporated. A PREC also does not receive a special tax rate just because it is a PREC. Its potential financial value often comes from retaining some earnings inside the corporation and deferring personal tax until the money is paid to the shareholder, subject to applicable corporate tax rules. For an Ontario real estate agent, the decision comes down to two questions: can the cor...