Until recently, real estate salespeople and brokers in Ontario were unable to incorporate. However, as of October 1, 2020, this has changed, and they may now consider forming a Personal Real Estate Corporation (PRECs). This blog post explores the process and factors to consider when incorporating your real estate practice.

The Path to PRECs

After a consultation period that concluded on September 8, 2020, the Government implemented regulations supporting Personal Real Estate Corporations (PRECs) under the Trust in Real Estate Services Act, 2020. This allows Ontario real estate salespeople and brokers to operate their businesses through PRECs.


Should You Incorporate?

While incorporation is now possible, it’s crucial to evaluate whether it suits your specific circumstances. If your income exceeds your personal expenses, incorporation may be worth considering. However, it’s essential to have a well-planned tax strategy to manage the corporation’s funds and individual taxes effectively.


Tax Advantages of Incorporation

Incorporation can offer significant tax deferral benefits. By earning income within the corporation, you can defer personal taxes and reinvest surplus funds for future growth. This approach may lead to increased investment opportunities compared to earning income personally.


Other Benefits of Incorporating

Besides tax deferral, incorporation may enable income splitting with family members and access to the lifetime capital gains exemption. However, recent legislative changes have altered the income-splitting landscape, requiring proper planning.


Bookkeeping and Compliance

Incorporating introduces additional administrative responsibilities. Corporate tax returns (T2) require accurate balance sheet and income statement reporting, subject to closer scrutiny. Robust bookkeeping solutions are essential to ensure tidy and accurate year-end records.


The Cost-Benefit Analysis

Incorporating incurs extra costs in legal, accounting, and tax-related matters. However, when properly managed, the benefits of tax deferral and investment opportunities can outweigh these expenses.


Next Steps

Incorporation is not a one-size-fits-all solution, and careful analysis is necessary to determine if incorporating a Personal Real Estate Corporation (PREC) aligns with your goals. Seek guidance from a trusted advisor to make an informed decision.



Incorporating your real estate practice through a Personal Real Estate Corporation (PREC) can offer several advantages, including tax deferral and investment opportunities. However, it’s crucial to weigh these benefits against the associated costs and consult with experts to ensure it aligns with your unique circumstances and objectives.