Your PREC doesn't retire when you do.

When you stop trading, your company stops being a PREC. But the company, and the money inside it, carry on. Here's what changes, the common ways money comes out, and what happens if money is still inside when you die.

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.

The short answer

Think of your PREC like a delivery truck. For years it hauled commissions in. At retirement it parks in the driveway and becomes a storage unit. The real question isn't what happens to the truck. It's how the contents get unloaded without being taxed twice.

The day you hang up your licence

1
It stops qualifying. A PREC only exists while its owner is employed by a brokerage to trade in real estate. When your registration ends, the company no longer meets that condition.
2
You tell RECO. You must notify RECO in writing within five days of any change that affects your PREC's eligibility.
3
The company carries on. Nothing in the rules dissolves it. It becomes an ordinary Ontario corporation, usually holding your savings and investments.

Two things to sort out with your professionals ahead of time:

Trailing commissions. Deals closed before you retire may pay out after. Your brokerage can tell you how and where those get paid.
Ownership changes. Once the company isn't a PREC, the PREC-only ownership rules shouldn't apply anymore. RECO doesn't publish guidance on this, so have a corporate lawyer confirm before changing anything.

Common ways money comes out in retirement

Most retired owners take money out over many years rather than all at once. Here's how the common approaches compare.

1. Steady yearly dividends

How it works

Take what you need each year, while your other income is lower than in your working years.

Keep in mind

Coordinate with CPP, OAS and RRIF income so the extra doesn't push you into a higher bracket.

2. Dividends to a spouse once you're 65

How it works

Once you're 65, the TOSI rules generally stop blocking dividends to your spouse, so income can be shared.

Keep in mind

Your accountant should confirm the exception applies to your setup.

3. Leaving it invested

How it works

The company keeps investing. The $50,000 passive income limit stops mattering once there's no business income left to protect.

Keep in mind

Investment income like interest is taxed at a high rate inside the company, with part refunded when dividends are paid.

4. Winding up all at once

How it works

Pay everything out and close the company.

Keep in mind

That can mean one very large taxable year.

5. Holding it until death

How it works

Leave some or all of it for your estate.

Keep in mind

Without planning, this is where double tax can happen (see below).

As of 2026Ontario's 2026 budget raises the top tax rate on non-eligible dividends, the kind most PRECs pay, from 47.74% to 48.89% starting January 1, 2027.

Can a PREC be sold?

You may hear the idea of selling PREC shares to another realtor and sheltering the gain with the lifetime capital gains exemption. It's worth knowing why that's often harder than it sounds:

Listings and client agreements sit with your brokerage, not your company.
Your relationships are personal, so they tend to leave with you.
To qualify, a company's assets generally need to be almost entirely (about 90%) used in an active business at the time of sale. A retired PREC holding investments usually won't meet that test.

If a sale is suggested to you, ask your accountant for a written opinion first.

If money is still inside when you die

Money left in a private company at death can be taxed twice: once on your final tax return, and again inside the company when investments are sold to pay that bill.

If you die while still working, the company stops being a PREC right away and your shares pass to your estate.
For tax purposes, your shares are treated as sold at fair market value immediately before death.
In one published illustration, company shares that had grown to $2 million left the estate a tax bill of about $500,000, and the company then paid its own tax selling investments to fund it, pushing the total toward $1 million.
Shares left to a surviving spouse can generally roll over with tax deferred until the second death.
After-death planning can reduce double tax, but some options have short deadlines, so executors should involve an accountant early.
Many Ontario families use a separate will just for private company shares, which can keep their value out of probate fees. Ask your lawyer whether that fits.

Where life insurance can fit

Some owners use corporate-owned insurance and pension plans as part of their retirement and estate picture. Whether any of these fits depends on your health, cash flow and plans.

Corporate-owned permanent life insurance can pay out to the company tax-free, and much of it can then reach your family tax-free, helping cover the estate's tax bill. (Tax-free at death)
Growth inside a qualifying permanent policy doesn't count toward the passive income limit while you're still working. (Grow surplus)
Pension-style plans, such as an Individual Pension Plan, are based on salary, so realtors who've only paid themselves dividends may have little room. That's a decision to look at years ahead. (Bigger retirement)
Disability and critical illness coverage protect the income that fills the PREC in the first place. (Health safety net)

Topics to cover with your accountant, lawyer and insurance advisor

1.Five or more years out: my salary and dividend mix, whether a holding company makes sense, whether permanent insurance fits while I'm insurable, and whether my will handles my company shares.
2.Two to three years out: how much I'll draw each year, from which source, and paid to whom; what ownership changes I'd want once the PREC rules stop applying; how trailing commissions will be paid.
3.The year I retire: notifying RECO within five days, wrapping up my PREC agreement with my brokerage, and starting a dividend plan.
4.Every year after: a joint review with my accountant, lawyer and insurance advisor.

FAQ

Does my PREC have to be wound up when I retire?

No. Nothing in Ontario's PREC rules dissolves the company. It stops qualifying as a PREC and carries on as a regular corporation.

Do I need to tell RECO when I retire?

Yes. You must notify RECO in writing within five days of any change that affects your PREC's eligibility.

Can commissions I earned before retiring still be paid after?

Ask your brokerage. How trailing commissions are paid after you stop trading depends on your agreement with them.

What happens to my PREC if I die?

It stops being a PREC and your shares pass under your will, often to a spouse or your estate. The tax result depends on your plan, so your executor should involve an accountant early.

New to PRECs? Start with PREC basics

Information only, not advice

This page covers Ontario's rules. Alberta realtors can also incorporate, under Alberta's own rules, which aren't covered here.

Sources

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