{"id":881,"date":"2021-11-01T00:29:00","date_gmt":"2021-11-01T00:29:00","guid":{"rendered":"https:\/\/www.realestateleads.ca\/blog\/?p=881"},"modified":"2023-09-25T23:21:11","modified_gmt":"2023-09-25T23:21:11","slug":"3-primary-advantages-to-setting-up-a-prec-for-realtors","status":"publish","type":"post","link":"https:\/\/www.realestateleads.ca\/blog\/3-primary-advantages-to-setting-up-a-prec-for-realtors\/","title":{"rendered":"3 Primary Advantages to Setting up a PREC for Realtors"},"content":{"rendered":"
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It has been a while since we created a blog entry that wasn\u2019t focusing on some aspect of the Canadian real estate market, and we do enjoy sharing personal career tips for realtors from time to time here. So with that in mind we\u2019re going to use today\u2019s entry to discuss the merits of a move that many realtors make after they\u2019ve built a solid footing with their career. That\u2019s setting up a Personal Real Estate Corporation, and for some realtors this is indeed most beneficial with the way they can beginning their business income as a corporation.<\/p>\r\n\r\n\r\n\r\n

Most of time these days when you see a realtor\u2019s sale sign outside of a home you will see the realtor\u2019s name with \u2018personal real estate corporation\u2019 or \u2018PREC\u2019 right below it. That means this realtors has established a PREC for their business and this is something that is possible in BC, Alberta, Saskatchewan, Manitoba, Quebec, Ontario, and Nova Scotia. And it is not only realtors who have this option, as many other types of professionals can make the same choice.<\/p>\r\n\r\n\r\n\r\n

As mentioned, most realtors move to establish their PREC once they\u2019ve well established themselves as a realtor working in that region. Getting to the point requires more than a few homes bought and sold, and for newer realtors who are struggling with getting to that point our online real estate lead generation system here at Real Estate Leads is an excellent resource that\u2019s made available to realtors of any level of experience in the business. It puts you more directly in touch with people who are ready to make a move on real estate.<\/p>\r\n\r\n\r\n\r\n

But enough about that for now, let\u2019s look at the benefits of a personal real estate corporation for realtors and you can evaluate whether it will be the right fit for you. Keep in mind first that this arrangement won\u2019t be a good fit for every realtors. Incorporation usually only makes real sense when they have an existing corporation with accumulated savings they wish to invest in real estate, or if the person is an investor who is looking to buy and sell real estate and will benefit from lower tax rates on this corporate business income.<\/p>\r\n\r\n\r\n\r\n

Onto the advantages, and here they are:<\/p>\r\n\r\n\r\n\r\n

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    Income tax deferrals<\/strong><\/h3>\r\n<\/li>\r\n<\/ol>\r\n\r\n\r\n\r\n

    One of the primary advantages to having their own PREC for a realtor is the ability to defer income tax. The tax rate on small business income up to $500,000 is usually upwards of 10% in any Province, and profit left in a PREC generally qualifies for this low tax rate. After-tax profits in a corporation can be paid out as a dividend. These payments will be at rates ranging from 0% up to 47.74%, based on the recipient\u2019s other sources of annual income.<\/p>\r\n\r\n\r\n\r\n