Realtor accountant in Hamilton

Commission income runs through the brokerage

A realtor’s gross commission rarely lands in their bank account whole. The brokerage takes its split, deducts desk fees, franchise fees, advertising charges and sometimes a transaction fee, and pays the rest. The brokerage statement is the real record of the year, and the tax return has to agree with it. Booking only what hit the bank understates both income and expenses, and it makes the HST return disagree with what the brokerage reports. We reconcile the year’s deals to the brokerage statements and book each commission gross, with the brokerage deductions coded as expenses. Real estate professionals’ accounting covers the wider picture.

Ontario personal real estate corporations

Since 2020, Ontario has allowed registered salespeople and brokers to have their commissions paid to a personal real estate corporation. The appeal is the same as any incorporation: income left in the company is taxed at the small-business rate rather than at your personal rate, and you draw what you need as salary or dividends. The catch is that the benefit only exists if you leave money in the company. A realtor who spends everything they earn gains little and pays for a second set of returns. The PREC also has conditions set by the regulator on who can own shares and what the company can do, so it is not the same as an ordinary operating company. We run the numbers on your actual income and spending before you incorporate, not after. When to incorporate sets out the comparison.

Once the PREC exists, the yearly question is how to pay yourself. Salary is deductible to the company and builds RRSP room; dividends are simpler and skip payroll. A spouse who helps with marketing or admin can be paid a reasonable salary for that work, but dividends to family members who are not active in the business can fall under the tax on split income. Money taken from the company without either decision sits in the shareholder loan account, and it has to be cleared within one year after the year end. The salary vs dividends calculator runs the comparison, and tax on split income explains the family rule.

HST on commissions

Commissions are taxable services, so an Ontario realtor charges 13% HST on them once registered. Registration becomes mandatory once taxable sales pass $30,000 in four consecutive calendar quarters, and most working agents pass that in their first busy season. The brokerage usually pays HST on your share, and you remit it on your own return. HST paid on your car, phone, marketing and brokerage fees comes back as input tax credits. Because a realtor buys relatively little, the quick method is often worth modelling. If you incorporate, the PREC needs its own HST registration, and the brokerage needs the new number before the next deal closes. The quick method works through the arithmetic.

Car, home office and marketing

A Hamilton agent drives: showings on the Mountain, listings in Ancaster, a closing in Stoney Creek, back to the brokerage. The business share of vehicle costs is deductible, and the share is set by a log of business kilometres, not an estimate made at tax time. A home office is claimable where it is your principal place of business or used regularly to meet clients, and the claim is limited to the business share of the home’s costs. Inside a PREC, both work differently: the company reimburses you under a proper arrangement rather than you claiming on your T1. Marketing is generally deductible, but client gifts and meals run under their own limits. The mileage and vehicle log and home office expenses in a corporation cover both.

Lumpy income and instalments

Real estate income follows the market, not the calendar. A strong spring can carry the year, and a slow fall can make the April bill feel unfair. Once your net tax owing passes $3,000 in the current year and either of the two previous years, the CRA expects quarterly instalments on March 15, June 15, September 15 and December 15. Unincorporated agents hit that line early, because nothing is withheld from commission. We set a tax reserve rate when you start and adjust instalments to the year you are actually having, so the balance due on April 30 is not a surprise. The instalment calculator shows how the amounts are worked out.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• Corporate return and year-end financial statements for your PREC
• Personal T1 coordinated with the corporate return
• Commission income reconciled to brokerage statements
• HST registration and filings, including the quick method decision
• Vehicle, home office and marketing claims supported properly
• Instalments planned against real commission timing
• Salary-versus-dividend mix recalculated each year

Fixed fees, fully online

EverStone is an Abbotsford CPA firm working with Hamilton realtors entirely online — video calls, secure upload and e-signature. We are three hours behind you, so a question sent after an evening showing is usually answered by morning. For a practice run between showings, not having to be somewhere at a set hour is usually the point. The fee is fixed and agreed before work starts. See what it costs.

Remote accounting for realtors from Abbotsford

EverStone works with Hamilton realtors from one location in Abbotsford, British Columbia. There is no Hamilton office, and nobody on the ground there. Calls happen by video or phone and paperwork moves by secure upload link and e-signature. Commission income, the personal real estate corporation question and expense tracking are handled together, because in practice they are one decision.