Personal Real Estate Corporation

2009/01/18 Originally published in the Vernon Morning Star.

At long last, every Realtor® and not just real estate brokerages are permitted by the provincial government to conduct their business through a professional corporation. Previously, any Realtor® that wanted to incorporate had to have a separate brokerage license. If the Realtor® didn't hold a managing brokerage license themselves, they had to hire (at considerable expense) someone who had a managing brokerage license, if they wished to have an incorporated brokerage. I cannot think of another professional group that has been held back from the business advantages of incorporating. Doctors, dentists, architects, lawyers, accountants and business owners of all varieties have all had that right but until now, Realtors® did not.

Generally Realtors® do not operate in an employer/employee relationship, but rather as independent contractors. We make our own earnings. We pay our own overhead. We profit when the times are good. We lose in the times that are not good, just like other businesses do.

You will soon see real estate signs out there that refer to "Personal Real Estate Corporations". This change in our signage is necessary because the Real Estate Council requires us to show to the public that the realtor is conducting their business through a Personal Real Estate Corporation. If you see the abbreviation P.R.E.C. please know that it stands for Personal Real Estate Corporation.

Rest assured, this change in policy does nothing to alter the regulations governing our business conduct or our standards of practice. Nor are our liabilities to the consumer diminished. We are the same now as we were in all the years past in this regard. Consumer protection standards are unchanged.

So why would Realtors® bother to incorporate? As business people we need to be able to better plan our income tax positions. We need to be capable of leaving income in our Personal Real Estate Corporations so that it will be there for our use in lean years and in our retirement years. The benefit of income splitting becomes possible in some cases with the Realtor's® spouse, children and possibly with other companies that the Realtor® beneficially owns. The real estate profession from a tax planning perspective, is now on equal footing with most other professions.

Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email her or call 503-3755.

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