![]() ![]() Ontario realtors can name family members as shareholders of their PREC as well, but the realtor must own all voting shares of the company. After-tax profits in a corporation can be paid out as a dividend at rates ranging from 0% up to 47.74%, depending on the recipient’s other income for the year. Note that I use the term tax deferral, not savings, as eventually personal tax becomes payable to withdraw accumulated corporate savings. So, for a high-income Ontario realtor, incorporation could result in tax deferral of up to 41.33%, based on the top personal rate of 53.53% less the corporate small business rate of 12.2%. Profit left in a PREC generally qualifies for this low rate of tax. The tax rate on small business income up to $500,000 in Ontario is 12.2%, and comparable in other provinces. One of the primary benefits to incorporation for a realtor, or anyone else, is the ability to defer income tax. Getting back to PRECs, whether a realtor should incorporate depends on their circumstances. I have written recently about whether you should buy real estate through a corporation. Some other scenarios may include investing in commercial real estate or establishing a not-for-profit corporation as part of a family cottage succession plan. ![]() Or an investor who wants to buy and sell real estate-flipping properties-may benefit from a lower tax rate on this corporate business income. An example of when incorporation makes sense is if someone has an existing corporation with accumulated savings they want to invest in real estate. Real estate investors may not benefit from setting up a corporation to hold their real estate investments. ![]() A personal real estate corporation is only for a real estate agent. Several other professionals in Ontario, like doctors, dentists, lawyers, accountants, social workers, engineers and architects, can also establish professional corporations.Ī PREC should not be confused with a corporation set up by a real estate investor to own real estate. ![]()
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