Last week, the Ontario Government introduced new and amended regulations to the Real Estate and Business Brokers Act, 2002 (REBBA), regarding Personal Real Estate Corporations (PRECs).
These changes may result in significant tax savings and deferral opportunities for the salesperson or broker. Based on each registrant’s personal circumstances, there are advantages and disadvantages to the creation and use of a PREC.
- The legislation has been amended to permit a brokerage to pay remuneration owed to a salesperson or broker for trading in real estate to a corporation that meets specific criteria;
- The corporation is referred to as a PREC;
- A PREC is a corporation that a salesperson or broker may establish that is permitted to directly receive from a brokerage remuneration that is earned by the registrant;
- The new rules allow for, but do not require, the use of a PREC; and
- It’s important to speak to the broker of record to inquire whether the brokerage is willing to enter an agreement with the PREC. Brokerages are not obligated to do so.
Salespersons should consult financial and other experts on whether a PREC is the right approach for them.
For more information regarding PRECs, click here.
Should you have any questions or feedback, please reach out to myself or the team. As always, we are here to help and support you.