Personal Real Estate Corporations and New Advertising Terms

Government of Ontario introduced and amended regulations related to incorporations and advertisement terms on October 1st, 2020. The legislation has been amended to allow real estate salespeople to form Personal Real Estate Corporations (PRECs). British Columbia became the first province to allow for incorporation of those who trade in real estate in 2008. This was followed by Quebec, Manitoba, Saskatchewan, Alberta and Nova Scotia.

Personal corporation is an advantage afforded to many regulated professionals in Ontario, including doctors, architects, accountants and lawyers; and it is a benefit the real estate industry has long lobbied for.  Personal incorporation is a matter of tax fairness for Realtors, resulting in a more efficient business environment. Realtors in independent contractor relationships earning higher incomes are best positioned to benefit. However, it all depends on the personal circumstances.

Incorporation certainly has many advantages, including:

  • tax deferral;
  • an incentive to save and increase your net worth; and
  • as an excellent vehicle for retirement savings.

There are pros and cons that will vary with each salesperson’s or broker’s situation that you should be aware of. The decision to consider incorporation requires an assessment of a whole range of factors. There are also the annual costs, including professional fees, of maintaining a corporation with respect to financial statements, annual corporate minutes and tax returns. Despite some of these costs and limitations, incorporating can prove to be extremely beneficial for many registrants. 

Additionally, the Code of Ethics under REBBA has been amended to permit the use of new terms to describe a salesperson and broker. Eligible registrants who wish to do so may now use the new terms. Brokers, other than the Broker of Record, are now permitted to use the following additional descriptors:

  • Real estate agent
  • Broker real estate agent
  • REALTOR® (limited to CREA members in good standing)
  • REALTOR® broker (limited to CREA members in good standing)

Salespersons are now permitted to use the following additional descriptors:

  • Real estate agent
  • REALTOR® (limited to CREA members in good standing)
  • REALTOR® salesperson (limited to CREA members in good standing)

Leave a Comment

Your email address will not be published. Required fields are marked *