Incorporation for Real Estate Agents in Ontario

Incorporation for Real Estate Agents in Ontario

Agents generally want to incorporate for tax purposes. Recent legislation will enable the ability to utilize corporations.

When I refer to “agents” I really mean individual practitioners in the business, as that term is commonly understood.

There are 5 routes for Incorporation for agents, the first four, you can use now:

1)    Brokerage, expensive to set up, and you need Broker of Record and RECO compliance,

2)    Sub-brokerage, if this is available through your existing Brokerage, this requires a name modification and a BOR, your existing Brokerage will provide the “back end” services,

3)    A corporation for “back end” services to your business, perhaps by a family member, marketing, photography etc. This permits income splitting.

4)    A corporation for “non trading” activities, like property management and various types of consultations and opinions,

5)    Not available right at the moment, but soon, a corporation for “trading activities” under REBBA, Await the status of the Tax Fairness for Realtors Act. Right now in Committee as of 28 April 2017 after presentation of Third Reading. Committee recommendations will deal with the Regulations required to other legislation. Then it will have to pass Third Reading, and then it requires Royal Assent, which is the commencement or effective date.

Since trading for most agents is the largest income generator, some of the other routes are less appealing.