Undoubtedly, for decades to come, 2020 will be talked about as the year of change. We all have learned to do things differently.
Some 2020 changes have been welcomed, like the change which now allows Ontario real estate professionals to operate through a Personal Real Estate Corporation (PREC).
Whether you are a Real estate agent, Broker real estate agent, Realtor®, Realtor® Broker, or Realtor® Salesperson, this new avenue in which to run your business is available as long as you are a registrant of the Real Estate Council of Ontario (RECO).
In March of 2020, Bill 145 received Royal Assent which created the Trust in Real Estate Services Act, 2020 (TRESA 2020), upgrading and renaming older legislation, Real Estate and Business Brokers Act, 2002 (REBBA 2002). TRESA 2020 took effect on October 1, 2020 and opened new opportunities for Ontario real estate professionals to incorporate Personal Real Estate Corporations (PRECs).
Benefits of creating a Personal Real Estate Corporation
Creating a PREC provides an opportunity to access numerous potential benefits including but not limited to:
- Deferral of tax on excess income;
- Income splitting with family;
- Individual remuneration planning tailored to your needs;
- Optimal business exit tax planning opportunities;
- Advanced Estate planning opportunities.
PREC’s are required to adhere to specific criteria and contain certain qualities to be recognized and qualified under the Real Estate Council of Ontario (RECO), thus making it imperative that you know the facts and do things properly.
Factors to consider when creating a Personal Real Estate Corporation
Determining whether a PREC is right for you is not dependent on your level of income. There are many individual qualitative and quantitative factors to consider in making this decision. It is imperative that you engage in an individualized analysis of your personal, family, and financial situation, combined with your retirement plans, so that you can make an informed decision that is right for you.
Factors that can add to the complexity of your specific situation include the level of your income, the number of years you have been practicing, your family situation and your current business arrangements. All these factors impact the process that you will need to implement to arrive at the successful creation of a PREC.
Discussions with your accounting and tax professionals, legal professionals, and banking professionals will all be necessary to make your final decision and then proceed with implementation efficiently and effectively.
As real estate professionals, you recognize the value you bring to buyers and sellers of homes.
You can expect to receive that same value from your team of accounting/tax/legal/banking professionals through the level of expertise they will deliver in assessing your needs, implementing actions based on your decisions and consulting with you into the future.
Assessing the benefit of a PREC for your situation requires individual attention. Our Team of professionals at McCay Duff LLP is ready to work with you throughout the process. Contact Karen M. Freake, CPA, CA, Partner today to get started!Contact Us