Realtor accountant in Saanich

For a realtor working through a PREC, monthly bookkeeping starts from $300 a month with the GST return included, and the PREC’s year-end T2 is quoted after a free consultation. An unincorporated realtor’s self-employed T1 with the T2125 commonly costs $250–$450. Every fee is fixed in writing before the work starts.

A spring market and an uneven year

Listing activity usually builds in spring, when families want to move before the school year, and slows over the winter. Commission follows, often weeks after the offer is accepted. A realtor can earn a large part of the year’s income in a few months and very little in others.

Tax does not follow that rhythm. If no tax is withheld at source, the CRA expects instalments once net tax owing exceeds $3,000 in the current year and in either of the two previous years. They are due March 15, June 15, September 15 and December 15. A realtor who sets aside a fixed share of each commission cheque, in a separate account, rarely meets a surprise in April. The instalment calculator shows the options.

Working through a personal real estate corporation

British Columbia permits realtors to earn commission through a PREC. The brokerage pays the corporation instead of the individual, and the commission is taxed inside it at the small business rate. What you leave in the company is taxed again only when you take it out.

A PREC pays off when commission runs ahead of what you spend. If you take everything out each year, the saving is small and the cost of a second return and set of books remains. The choice between salary and dividends from the PREC then shapes CPP, RRSP room and the household’s tax. See PREC accounting in BC and the salary versus dividends calculator.

The first year in a PREC

The first PREC year has a set order. The corporation is incorporated, the licence is updated so the brokerage can pay the company, a business bank account is opened, and GST is registered under the corporation’s business number. Commission earned before the switch stays on your personal return; commission after it belongs to the PREC. Mixing the two is the most common first-year error.

Family members can sometimes hold non-voting shares, but dividends paid to them can fall under the tax on split income. That rule often removes the benefit for adults who do not work in the business. The tax on split income guide explains the exclusions.

GST on commission is your return, not the brokerage’s

Real estate services are taxable for GST. A realtor or PREC that passes $30,000 in taxable revenue over four consecutive calendar quarters must register, and most register from the start. GST is charged on commission, collected through the brokerage’s payout, and remitted on your own return.

The GST you pay on marketing, staging, a vehicle and a phone comes back as input tax credits. Most realtors file annually. An unincorporated realtor with a December year-end files the GST return by June 15 and pays by April 30. A PREC that files annually files and pays three months after its year-end. The input tax credits guide lists what qualifies.

Expenses that hold up

A realtor working Saanich and the peninsula drives a great deal: from a showing in Tillicum to an open house in Broadmead to an acreage in Central Saanich. Vehicle costs are deductible in proportion to business kilometres, and the vehicle log is what supports the claim. Marketing, signage, photography, staging, licensing and board fees, and a home office used regularly for the business are deductible.

Client gifts and meals are deductible at 50% for meals and entertainment, with a receipt and a note of who and why. Clothing generally is not. Referral fees paid to another licensee are deductible, but cash referral payments to unlicensed people raise regulatory questions as well as tax ones. The meals and entertainment guide covers the 50% rule.

Your own properties

Realtors often own a rental or two, and the tax rules for their own property are the same as for anyone. Rent goes on form T776. A house you lived in and later rented out has a change in use, which affects the principal residence exemption. Selling a property you bought to resell quickly can be business income rather than a capital gain. See selling a rental property.

Acreage on the peninsula raises its own questions for the realtor who buys it personally. Land in the Agricultural Land Reserve, a farm stand, or a suite rented to a tenant each change how the property is taxed while you own it and when you sell. Raise them before the purchase closes, while the ownership structure can still be chosen. Keep the closing documents for at least six years after the sale.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• Bookkeeping that ties brokerage statements to deposits
• GST registration and returns, with input tax credits
• PREC set-up advice and the PREC’s T2
• Salary and dividend planning before year-end
• Instalment planning around an uneven year
• Your T1, including any rental property

Fixed fees, fully online

EverStone is an Abbotsford CPA firm serving Saanich realtors entirely online. There is no Saanich office. Brokerage statements and receipts come in through a secure upload link, questions are answered by email between showings, and returns are signed electronically. See what it costs.