Your commissions can go to a company instead of to you. Here's how that works.
Since October 1, 2020, Ontario realtors have been able to have their commissions paid to a personal real estate corporation, or PREC. This page explains what a PREC is and how the rules work, in plain English.
Information only, not advice
This page explains how PRECs generally work in Ontario, as of October 2026. It isn't tax, legal, accounting or financial advice, and it isn't a recommendation to set up, keep, sell or wind up a PREC. Everyone's situation is different. Please talk to your accountant and lawyer before acting on anything here.
This page covers Ontario's rules. Alberta realtors can also incorporate, under Alberta's own rules, which aren't covered here.
What a PREC is
A PREC is a company that receives your commissions from your brokerage instead of you receiving them personally. The rules come from Ontario's Trust in Real Estate Services Act and Ontario Regulation 536/20.
The rules are strict about who's in charge:
- You own every voting share, and you're the president, sole director and sole officer.
- Your spouse, children or parents (or a trust for a minor child) can hold non-voting shares. Nobody else can.
- A holding company can own your voting shares, as long as you own all of it and run it alone.
- Commissions can only come from your brokerage. You, your PREC and your brokerage sign a three-way agreement, and the brokerage doesn't have to agree to one.
- There's no naming rule, but the PREC can't be advertised as a real estate business.
- A PREC is exempt from registration, but you must give RECO its legal name and address for service before it receives any commissions.
Why realtors use one
- Tax deferral. Business income kept inside the company is taxed at a lower corporate rate than most realtors pay personally. It's a deferral, not a savings: personal tax is paid when money comes out.
- Family income splitting, within limits. Since 2018, the 'tax on split income' (TOSI) rules tax most dividends to family members at the top rate. The main exceptions are when you're 65 or older, or when your spouse works more than 20 hours a week in the business.
- Investing the surplus. The company can invest money it doesn't pay out. But while you're still working, too much investment income inside the company starts shrinking the lower business tax rate.
The honest fine print
- A PREC isn't a liability shield for your work. You're still personally responsible for professional mistakes, and a PREC isn't covered by RECO's professional liability insurance program.
- Tax deferred isn't tax saved. The tax comes due when money leaves the company.
- There are extra legal and accounting costs to set up and run a corporation every year.
- Your brokerage has to agree to pay your PREC, and isn't required to.
Questions to take to your accountant and lawyer
- 1.Does my income leave enough surplus each year to make a PREC worth the extra cost?
- 2.Would a holding company make sense alongside the PREC?
- 3.If family members hold non-voting shares, would the TOSI rules apply to their dividends?
- 4.What does my brokerage's PREC agreement require of me?
Thinking about the other end?
What happens to your PREC when you retire, and why it matters long before you do.
Read: Your PREC at retirementFAQ
Do I have to register my PREC with RECO?
No. A PREC is exempt from registration. You do have to give RECO the PREC's legal name and address for service before it receives any commissions, and tell RECO in writing within five days of any change that affects its eligibility.
Does my PREC need special wording in its name?
No. Ontario doesn't set naming rules for PRECs. The company just can't be advertised as offering real estate services.
Can my PREC hold investments or rental property?
It can hold investments. Investment income above certain limits can raise the tax on your business income, which is why some realtors use a separate holding company. Your accountant can tell you which setup suits you.
Information only, not advice
This page explains how PRECs generally work in Ontario, as of October 2026. It isn't tax, legal, accounting or financial advice, and it isn't a recommendation to set up, keep, sell or wind up a PREC. Everyone's situation is different. Please talk to your accountant and lawyer before acting on anything here.
This page covers Ontario's rules. Alberta realtors can also incorporate, under Alberta's own rules, which aren't covered here.
Questions about how this works?
I'm happy to walk through it with you and your accountant. No pitch, no pressure.
Book a 20-minute chat