Your question: What is a personal real estate corporation Prec?

A personal real estate corporation, or PREC, allows a real estate agent to earn their business income through a corporation. … An example of when incorporation makes sense is if someone has an existing corporation with accumulated savings they want to invest in real estate.

Can Prec own real estate?

PREC can only have real estate professionals (registered broker or salesperson) as shareholders of equity shares (voting shares), while family members (parent, spouse, children) are allowed to own non-equity shares (non-voting).

Is a PREC a personal services business?

Personal Services Business – A licensed realtor who is the voting shareholder of the PREC and who would be an employee of another entity but for the existence of the PREC would be considered to be operating a “personal services business” (“PSB”) with adverse income tax consequences.

What is a PREC in BC?

As a licensed Realtor in British Columbia you have the option of operating your business through a professional corporation known as a Personal Real Estate Corporation (the “PREC”). This is one of the legal services that our real estate lawyers frequently receive inquiries for.

Who can own a Prec?

Each PREC must be controlled by one individual realtor and, as previously discussed, the definition of controlling shareholder within the regulation means the controlling shareholder owns all the equity shares of the PREC. This means that a group of realtors cannot come together to own equity shares of one PREC.

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How do you incorporate a Prec?

To set up a PREC, you’ll need to engage a lawyer to create a transfer agreement to transfer your assets from your sole proprietorship into the corporation, as well as to draft and file articles of incorporation and related resolutions.

What is a PREC account?

A personal real estate corporation, or PREC, allows a real estate agent to earn their business income through a corporation. Several provinces, including British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Nova Scotia and, most recently, Ontario, allow PRECs.

What are the advantages of a Prec?

The list of “pros” for a PREC include health spending, capital gains exemption, tax deferral, and income splitting. PRECs can take advantage of corporate tax rates.

Can a Prec hire employees?

Furthermore, just like any other legal enterprise, a PREC can hire employees regardless of their profession (so long as their remuneration does not entitle them to shares if it would throw the PREC offside) or enter into independent contractor arrangements.

How much does it cost for Prec?

In Alberta, it would cost you $1,300 a year instead of $650. Please note that your PREC license must be licensed at the same level as your personal real estate license, and you will only be able to provide the same level of real estate services as permitted by your personal license.

Can a Prec loan money?

Shareholder Loan Rules

These rules apply to incorporated businesses, including personal real estate corporations (PREC). Under these rules, money borrowed from the business is included as income on the shareholder’s personal tax return.

What should I name my Prec?

For a PREC, it’s best to go with ‘Your first name/first initial, your last name, Professional Real Estate Corporation. ‘ A lawyer can help advise you on appropriate names that are likely to be approved.

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Can I borrow money from my Prec?

It is possible to borrow income from your own corporation, which can be very tax effective. You can borrow money from your corporation for the purpose of purchasing a car or a house, but, you must pay the prescribed Canada Revenue Agency interest rate and set up the formal minutes for the loan.

Can a professional corporation own real estate?

What can you invest in via your professional corporation? … In addition to passive investment income from financial products, your corporation can hold investments like the real estate and infrastructure used in your practice.