1. PREC: The Personal Real Estate Corporations in British Columbia
Introduction:
The Real Estate Council of British Columbia (RECBC) has allowed individual real estate licensees to
incorporate Personal Real Estate Corporation (PREC).
Now the individual sales representatives licensed under the British Columbia Real Estate Council can
take advantage of the corporate tax structure.
Things to consider before considering for a PREC:
1. Future continuance in real estate profession
2. Sustainability of income from real estate profession
3. Possible expansion of business
4. Time management
5. Affordability to additional costs and fees
Disadvantages of a PREC
1) Two sets of licensing fees, E&O fees, and Compensation Fund fees every two years
2) Higher accounting fees
3) Some legal fees
4) More documentation and filings
5) RECBC restricts PREC to providing real estate services and those services which are
subordinate to, and exist to support, real estate services
6) Holding of real estate for rental or development purposes is not allowed
7) Restrictions of holding of a PREC’s voting shares to one licensee
Advantages of a PREC
1) Added client confidence, trust and believe
2) Opportunity for higher business and revenue
3) Low corporate tax rate CCPCs
4) income splitting opportunities
5) A holding company can be inserted into the entire structure to allow for the tax free transfer of the
PREC’s retained earnings to another corporation where the funds can be used for investments
including real estate development.
Summary and Recommendations
If you as a realtor believe that your income from real estate profession will continue to be as strong as the current
year, forming a PREC allows for great tax benefits. The advantages are many in comparison to disadvantages.
Firoze Shaik & Associates,Chartered Professional Accountant with two offices to service you in Lower Mainland
can answer all yourquestions you might have in relation to PREC.