Personal Real Estate Corporation Services (PRECS)

Why Do We Offer This Service For Realtors?

Admittedly, since the introduction of provincial legislation in October 2020, to allow realtors to incorporate their real estate businesses by utilizing Personal Real Estate Corporations (PRECS), the real estate industry has become a very good marketplace for someone with our background. As such, our intention is to become the predominant “tax team” for the real estate industry.

Although not a requirement, a number of realtors that we affiliate with become tax clients for our tax practice and many also become investment clients that we service through Canadian Investment Services.

Regarding the PRECS that realtors can now utilize, this has become the biggest tax saving tool offered to realtors. Most professional industries, doctors, dentists, accountants, have been granted the ability to channel their income through a corporation for some time now, with the real estate industry finally being granted that same privilege, resulting in significant tax saving for realtors.

The savings we have been seeing for many realtors that utilize PRECS is incredible. Even aside from the tax savings that realtors now experience with PRECS, the formation of these corporations can be further utilized into the areas of financial planning, investment management and estate planning. PRECS provide us as tax accountants with significant tools to not only lower the income taxes paid by realtors, but to work with realtors in areas of investment management and strategizing to fully utilize the many additional opportunities offered through PRECS.

Top 10 Benefits Of A PREC For Realtors.

  1. Significant overall income tax savings for any realtor grossing over $50,000 of commission income.
  2. PREC strategies to distribute realtor commission income to other family members.
  3. Use your PREC as your retirement vehicle (instead of RRSPS).
  4. Consider the utilization of a “PREC owned permanent life insurance policy” to create tax free income for your retirement.
  5. Significant tax planning strategies within PREC to avoid the unfavorable CRA passive income tax rules.
  6. Use your PREC to fund your health and dental expenses, making them tax deductible instead of an out-of-pocket personal expense.
  7. 7.Use your PREC as your personal holding company.
  8. Use built up equity in your PREC to collateralize this equity to build even more wealth.
  9. Use your PREC to invest in real estate investments, such as mortgage lending, joint ventures, owning your own real estate etc.
  10. Strategies on estate and succession planning or exit strategy of selling your business.

    Today’s successful realtors are well aware of the value in building professional relationships to supplement the service they provide to help buy or sell homes for their clients.

    The professional alliance that we offer to realtors is that of a Chartered Professional Accountant (CPA), a tax expert to help answer the tax questions that inevitably come up between a realtor and their clients, for example; Are there HST implications of a real estate sale or purchase? What about income tax implications? Capital gains? Principal residence exemptions? Can a family trust be utilized for a real estate transaction? Should the purchase of real estate be held in a corporation? Can we use a bare trust agreement within a Bare Trust corporation? 

    As you can see, and as you know, income tax inquiries can become a very important part of the discussions between a realtor and their client and, as such, an alliance with a CPA can add significant value for a realtor when dealing with their clients. Also, many realtors find themselves representing buyers and sellers of businesses. Businesses that want to sell require exposure and realtors can provide this for them. With that said, the buying and selling of a business has many tax complexities and it is well advised for a realtor to have access to tax expertise during this process, as such, this is something we provide to many realtors.

    We also help realtors with their clients who are interested in real estate investment opportunities; this is another great opportunity for realtors to add value to their business model to help their clients, which further supports the added value that a realtor can provide their client by having an affiliation with a CPA, who also is an experienced real estate investor.

    The Benefit Of A CPA To Realtors.