A Personal Real Estate Corporation (PREC) is a corporation formed by a real estate sales person or a real estate broker. The real estate salesperson owning the PREC license must be the sole voting shareholder, as well as the sole director/officer of their personal real estate corporation.
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What are the advantages of forming a Personal Real Estate Corporation?
- Tax deferral for life and retirement planning purposes.
- Reduction/elimination of Canada Pension Plan (CPP) contributions
- Income splitting with family members under certain circumstances to reduce family tax.
- This format is good for limited liability which means the owners' personal assets are protected from liabilities.
Who can form a PREC?
- Licensed Real estate agents who wish to receive their brokerage remuneration through a corporation can form a PREC.