PREC
The BrokerFold Team — Product + Engineering
Last reviewed
A PREC is a personal real estate corporation: a company, owned and controlled by an individual agent, through which that agent’s commissions may legally flow. It exists because provinces historically required real estate remuneration to be paid to the registrant personally; PREC legislation carved the exception. BC agents have had the structure for years, and Ontario joined in October 2020 under TRESA-era reforms — which is why “should I incorporate?” became a standard conversation at Ontario brokerage kitchen tables that fall.
What it changes — and what it doesn’t
The change is where the money lands. Commissions are paid by the brokerage to the corporation; the corporation pays you salary or dividends on your schedule; profits left inside are taxed at small business corporate rates rather than your top personal rate. That deferral — earning at corporate rates now, paying personal tax when you eventually draw the money out — is the entire economic engine, along with flexibilities like timing income across years.
What doesn’t change is everything the public sees. The licence is yours, not the corporation’s. RECO (or BCFSA in BC) still registers and disciplines you. Trading services are still provided by you through your brokerage. And the rules governing PREC structure are strict: the controlling shareholder must be the registrant, the corporation can’t trade in real estate itself, and its permitted business is essentially receiving your remuneration.
The advertising trap
Naming and marketing are where PRECs bite unsuspecting agents. A corporation’s legal name appearing in advertising doesn’t replace the regulator’s identification requirements — your registered name and brokerage must still appear as the rules demand, and a PREC name that misleads about who is licensed invites exactly the complaint you’d expect. Layer CREA’s trademark rules on top — REALTOR® is a membership mark, not a corporate decoration — and the safe pattern is boring: market yourself as yourself, per the advertising rules, and let the corporation live in your accounting, not your branding.
The sober math
A PREC costs real money — incorporation, annual filings, accounting — and pays off through deferral, not magic. Agents netting modest incomes they fully spend gain little; high, lumpy earners who can leave profit inside the corporation gain a lot. The decision belongs with an accountant who has your actual numbers, made once your pipeline — rather than your optimism — supports it.
Frequently asked questions
Does a PREC mean my corporation holds the licence?
No — licensing stays personal. You remain the registered salesperson or broker; the corporation is a vehicle your remuneration flows through. The regulator's rules on your conduct, advertising and identification apply exactly as before.
When is incorporating worth it?
Broadly, when you consistently earn well beyond what you spend personally, so profits can sit in the corporation at lower corporate tax rates. If you draw everything out to live on, the deferral advantage largely evaporates while the accounting costs remain. It's an accountant conversation, not a status symbol.
Keep reading
- RECO RECO — the Real Estate Council of Ontario — is the provincial regulator that registers agents and brokerages and enforces TRESA's conduct rules.
- REALTOR trademark rules REALTOR and MLS are CREA-controlled marks, not generic words. The usage rules for agent websites, domains and marketing — and why platforms enforce them.
- RECO advertising rules for websites The audit checklist: registered name with the right descriptor, brokerage clearly and prominently identified, nothing misleading — on site and socials alike.