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Accounting and tax planning for realtors, brokers, PRECs, real estate teams, and property managers across Canada. Built for owners managing commission cycles, rental portfolios, and the new layers of regulation introduced in the last few years.
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Forming a Personal Real Estate Corporation, PREC, is now possible in Ontario, BC, Alberta, and several other provinces. The decision is rarely about whether you can incorporate, it's about whether the structure makes sense for your level of commission income, your retirement plan, and your provincial regulator's rules on share ownership.
We work with everyone from newly licensed realtors tracking their first commission to multi-property landlords running 30+ units, brokerage owners structuring teams, and investors holding properties across borders.
Forming a Personal Real Estate Corporation in Ontario, BC, Alberta, or other provinces that allow it. Share ownership rules vary by province and limit who can be a shareholder. The decision integrates with broader tax planning for the realtor.
Whether a property sale is treated as capital gain (50% taxable) or business income (100% taxable) depends on intent, frequency, and holding period. CRA has been increasingly frequent in reclassifying flips as business income, especially after the 2023 anti-flipping rules.
Reporting rental income on T776, distinguishing active business income from property income, claiming Capital Cost Allowance, and managing recapture when the property is sold. Multi-property investors with five or fewer employees are typically classified as Specified Investment Business and lose access to the small business deduction. Clean bookkeeping from day one prevents most of the issues at year-end.
The 2023 anti-flipping rules automatically treat property sold within 12 months of purchase as business income, removing the capital gain treatment and the Principal Residence Exemption, with limited life-event exceptions. The rules apply even to properties intended as a residence.
When does forming a PREC make sense? Whether the small business deduction outweighs setup and ongoing costs, how the brokerage commission needs to flow, and what to do about retained earnings, all decisions that depend on the realtor's income level and long-term plans. The PREC is followed by ongoing corporate tax filings each year.
After two or three flips in a short window, the question is no longer hypothetical. CRA reviews intent, frequency, holding period, and source of financing. Getting this wrong on the return creates exposure for years.
When does a rental portfolio become a Specified Investment Business and lose the small business deduction? With five or fewer employees, most rental operations cross that line. Holding company structures, employee classification, and active management can change the outcome.
After the 2024 changes, expenses on short-term rentals that don't comply with municipal or provincial regulations are disallowed. Rentals registered in non-compliant municipalities, or operated against zoning rules, lose deductibility entirely. Restructuring or transitioning to long-term rentals is often the right path.
When the owner moved abroad but kept the property, NR4 reporting, NR6 election, and Section 216 returns need to be considered. The withholding obligation can create exposure for both the payer and the recipient of the rent.
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