Tax Tip Thursday

Today, I would like to talk to Real Estate Agents or anyone who knows a real estate agent.

After years of lobbying, Ontario real estate agents are FINALLY allowed to incorporate a Personal Real Estate Corporation, otherwise known as a PREC. This came into effect at the end of last year (2020). Now that I have a few minutes in my life, I have put together a complete solution tailored specifically for real estate agents, including a new company and website! At www.taxesforrealestate.ca, we can take care of your incorporation, contracting, bookkeeping, and taxes!

This is such a great opportunity for real estate agents, and many do not even know about it or understand it clearly. I can help with that. A PREC offers tremendous tax advantages to realtors in a few forms:

Deferral of SIGNIFICANT amounts of taxes

The numbers — that is what everyone wants to know about!

Right now, for a real estate agent who is making over $100k a year, you are paying over 40% in taxes on every dollar over than. And if you are making over $200k, you are paying 53% on everything over that amount! This means that you could defer as much as 40% in taxes on the income that you do not need for your current lifestyle. That could easily translate into $40k or more in tax savings in 1 year!

Access to the Lifetime Capital Gains Exemption

When you are done being a real estate agent you could sell your business, and almost $900k of the proceeds could be tax free!

Ability to Potentially Split Income

Since family members can own non-voting shares of a PREC, there could be an opportunity to split your income with family members several ways. Splitting income can result in additional massive tax savings!

There are a number of very specific requirements that must be complied with in order for any of this to work, so don’t think it’s as easy as just running out and incorporating.

Stop Paying Half of What You Earned to the CRA

Tired of the hefty taxes? Contact us to find out if a PREC is right for you! We have the expertise to incorporate you, set up your contracting, do your monthly bookkeeping, and prepare both your personal and corporate taxes.

To learn more, check out www.taxesforrealestate.ca, or contact us to book an appointment!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.