Accounting for real estate professionals, PRECs and brokers

Real estate income can double and halve between years, arrives through one payer, and the decision to incorporate depends on a provincial regulator’s share-ownership rules as well as tax. That combination raises specific 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 income arrives unevenly, is earned on completion rather than on acceptance, and comes with no tax withheld. Add a personal real estate corporation and the questions multiply: what the corporation may hold, how you take money out of it, and what happens to expenses that used to be personal.

Commission is earned on completion, not on acceptance

An accepted offer is not revenue. Commission is generally recognized on completion, when entitlement is unconditional, so a December deal completing in February is next year’s income. With large deals straddling year end, timing changes the tax bill materially; apply it consistently.

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

PRECs exist under provincial law, and rules vary: who holds voting shares, whether family may hold non-voting shares, naming, and whether the brokerage may pay the corporation. Tax benefits — small business rate deferral, control of income timing — matter only once licensing conditions are met. Reversing that order is the most common structuring error.

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 often pays no instalments in the first strong year, then owes a large balance and starts instalments — two years of tax within months. Corporations follow suit. Plan for it.

The deduction list is distinctive

Board dues, desk and franchise fees, licensing, errors and omissions insurance, advertising, staging, client gifts, vehicle use and a home office all appear on a realtor’s return. Several sit near a line: promotion versus entertainment, a gift versus a meal, business driving versus commuting. Review letters ask about exactly these.

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

The core service and city pages come first, then the guides that answer the questions realtors and PREC owners ask most often.

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

• Is incorporating worth it for you? — 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.
• What to do after incorporating — 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 for licensed agents, personal real estate corporations, managing brokers, brokerage owners, and mortgage brokers with similar commission income and deductions. It also suits agents in their first strong year weighing incorporation. Investors who own property rather than sell it should start with the real estate investor page instead.

Related: Accountant for property managers in BC.

How this runs remotely

EverStone CPA is a fully virtual, one-CPA firm. Agents keep unpredictable hours, so meetings happen by video when it suits, brokerage statements and expense records are shared electronically, and returns are filed directly with CRA. A licensee in Ottawa is served like one in Surrey; only the provincial PREC rules differ.

If you have incorporated, or are about to, the first year has a handful of decisions that are cheaper to make deliberately. See what a personal real estate corporation changes.