Accounting for realtors, PRECs and brokers

Real estate is one of the few professions where income can double and halve between years, where the entire revenue stream arrives through one payer, and where the decision to incorporate is governed not only by tax but by a provincial regulator’s rules about who may own the shares. That combination produces a specific set of accounting questions.

This page sets out what differs, then indexes the guides, calculators and pages on this site that cover them.

What is different about real estate professional accounting

Commission is earned on completion, not on acceptance

An accepted offer is not revenue. Commission is generally recognised when the transaction completes and the entitlement is unconditional, which for a deal signed in December and completing in February places the income in the following year. In a business where a handful of large transactions can straddle a year end, that timing decision materially changes the tax bill, and it needs to be applied consistently rather than opportunistically.

A PREC is a licensing structure before it is a tax structure

Personal real estate corporations exist under provincial real estate legislation, and the rules differ by province: who may hold voting shares, whether family may hold non-voting shares, how the corporation must be named, and whether the brokerage may pay commission to it at all. The tax analysis — deferral at the small business rate, control over the timing of personal income — only becomes relevant once the licensing conditions are satisfied. Getting the order backwards is the most common structuring error in this vertical.

GST applies to every commission

Real estate commission is a taxable supply, so the $30,000 small-supplier threshold is usually crossed within the first productive year, and often within a single transaction. Registration then brings quarterly or annual filing, input tax credits on advertising, vehicle and office costs, and the quick method as a possible simplification for an agent with low input tax.

Instalments arrive a year late and hit hard

A newly successful agent typically pays no instalments in their first strong year, files, owes a large balance, and is then required to pay instalments going forward — effectively funding two years of tax within a few months. The same pattern repeats for a corporation. Anticipating it is straightforward; discovering it is not.

The deduction list is distinctive

Board and association dues, brokerage desk fees, franchise fees, licensing, errors and omissions insurance, advertising and listing promotion, staging, client gifts, vehicle use and a home office all appear on a realtor’s return. Several sit close to a line: promotional spending versus entertainment, a gift versus a meal, and vehicle use that is genuinely business versus commuting. These are exactly the categories a review letter asks about.

Income splitting is narrower than it looks

The tax on split income rules restrict dividends paid to family members who are not sufficiently involved in the business, and a PREC’s share structure may already limit who can hold shares. Paying a spouse a genuine salary for genuine work is a different and more defensible route.

The guides, tools and pages for this vertical

Core service and city pages

• Accounting for realtors — the service page: what an engagement covers for a licensed agent or a PREC.
• Realtor accountant, Surrey — framed for agents working the Surrey and South Fraser market.
• Realtor accountant, Vancouver — for agents licensed in the Vancouver market.
• Realtor accountant, Ottawa — for Ontario agents, where PREC rules differ from BC.
• Accounting for real estate investors — the adjacent vertical: rental property, capital gains and the property flipping rules.

Deciding whether to incorporate

• Incorporation calculator — models the tax difference between earning commission personally and through a corporation. Run it before booking a lawyer.
• Incorporating versus staying a sole proprietor — the reasoning behind the calculator, including the costs incorporation adds.
• When to incorporate — the timing question: what income level and what stability make the switch worthwhile.
• Incorporation checklist — what has to be set up in the first weeks after the corporation exists.
• Federal versus provincial incorporation — the choice at the point of registration, and why a PREC usually follows provincial rules.

Getting paid, and paying tax

• Salary versus dividends calculator — models both routes on your own numbers. Worth re-running each year, because commission income moves.
• Salary versus dividends, in depth — the reasoning, including the non-tax consequences agents forget when applying for a mortgage.
• Corporate instalments — when a corporation has to start paying instalments and how they are calculated.
• Instalment calculator — estimates what will be required. Run it in the year the income jumps, not the year after.
• Tax on split income — why paying dividends to family is narrower than it used to be.
• Holding companies — when a second corporation above the PREC is worth the complexity.

Deductions and sales tax

• Advertising and promotion — listing marketing, signage and sponsorship — and where promotion becomes entertainment.
• Dues and subscriptions — board fees, licensing and software, and who may deduct them.
• Vehicle and mileage deductions — the log behind a claim that is unusually large in this profession.
• Home office expenses — how the deduction works when the corporation is the taxpayer.
• The 50% meals rule — client lunches and closing celebrations, and the limit that applies to them.
• GST/HST registration — the $30,000 threshold that a single commission can cross.
• Quick method calculator — compares the quick method against regular filing — often relevant for an agent with low input tax.

Who this fits

This hub is written for licensed real estate agents, personal real estate corporations, managing brokers and brokerage owners, and mortgage brokers whose income is commission-based and whose deduction profile looks similar. It also fits agents in their first strong year who are trying to decide whether incorporation makes sense yet. Investors who own property rather than sell it for others should start with the real estate investor page instead.

How this runs remotely

EverStone CPA is a sole-practitioner CPA firm at 32615 South Fraser Way in Abbotsford, BC, working fully remotely. Agents keep unpredictable hours and rarely have a free weekday afternoon, so meetings happen by video at the time that fits, brokerage statements and expense records are shared electronically, and returns are filed directly with CRA. Because everything runs remotely, a licensee in Ottawa is served the same way as one in Surrey — the difference is the provincial PREC rules that apply, not the process.