Personal Real Estate Corporation (PREC) in Ontario
What Ontario real estate salespeople and brokers need to know before setting up a PREC.
A Personal Real Estate Corporation (PREC) lets an Ontario realtor receive their trading income through a corporation. Permitted since October 2020 under the Trust in Real Estate Services Act (TRESA), a PREC is controlled by one registrant; family members may hold non-voting shares. Unlike other professions, a PREC needs no certificate of authorization and has no mandated name format.
Regulated by: Real Estate Council of Ontario (RECO), under TRESA
Permitted since October 2020 under TRESA
PRECs became available to Ontario realtors in October 2020 under the Trust in Real Estate Services Act, 2020 (TRESA), which replaced the former REBBA framework. The registrant remains registered with the Real Estate Council of Ontario (RECO) and continues to trade through their brokerage; the PREC is used to receive remuneration.
No certificate of authorization needed
Unlike a medicine, dentistry, law or CPA professional corporation, a PREC does not require a certificate of authorization from a regulator to exist. It must, however, meet the TRESA conditions for control, shareholding and its relationship with the brokerage. Getting the structure right from the start keeps it compliant.
One registrant controls the PREC
A PREC must be controlled by only one individual who is a registered real estate salesperson or broker; that person owns all the voting (equity) shares. You cannot make another realtor a voting shareholder of your PREC. This one-controller rule is a defining feature of the PREC structure.
Family members and non-voting shares
Non-voting (non-equity) shares may be held by the controlling realtor's immediate family members — a spouse, children or parents, or a trust for any of them. This allows income planning within the family while control stays with the single registrant.
Naming the PREC
TRESA does not impose a specific name format on a PREC, so it does not need to include "Professional Corporation." However, the name must not suggest that the PREC itself trades or deals in real estate or is a brokerage or team, since only the brokerage may trade. Choose a neutral name that avoids implying brokerage services.
Tax benefits, limits and setup
A PREC lets commission income be taxed in the corporation, generally at the lower small business rate, enabling tax deferral and income planning. It does not change your personal accountability as a registrant to your clients and RECO. Setup involves a NUANS name search and incorporation under Ontario's Business Corporations Act (government fee about $300), plus notifying your brokerage. Markham Office can prepare the incorporation.
Frequently asked questions
- Do I need RECO or government approval to set up a PREC?
- A PREC does not require a certificate of authorization to exist, but it must meet all TRESA conditions and you must notify your brokerage. You continue to be registered with RECO personally.
- Can another realtor be a shareholder of my PREC?
- No. A PREC is controlled by one registrant who holds all the voting shares. Only immediate family members may hold non-voting shares.
- Does my PREC name have to say "Professional Corporation"?
- No. TRESA does not mandate a name format, but the name must not suggest the PREC itself trades in real estate or is a brokerage or team.
- Is a PREC worth setting up?
- It mainly helps if you can leave commission income in the corporation for tax deferral. An accountant can tell you whether the savings justify the setup and ongoing costs.
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