Can Prec invest in real estate?

Can a Prec invest in stocks?

Corporate income left in the PREC can be used for investment purposes and thus can be used to invest in bonds, debt, and stocks, as well as invested back in the PREC. Since the corporate tax rate is so much lower, more money is available to invest.

What is Prec in real estate?

A Personal Real Estate Corporation (PREC) is a personal corporation that real estate agents and brokers can establish.

Can a holding company own a Prec?

As such, a holding corporation can be established and can own the equity shares of the PREC provided that the same individual realtor holds all the equity shares of the holding corporation that owns the PREC. This would be an example of indirect ownership.

How much does it cost to set up a Prec?

PRECs will have additional costs. Incorporation costs with a corporate lawyer may range from $1,000 to $3,000. Annual bookkeeping and accounting costs could cost an incremental $1,000 to $3,000 over and above a realtor’s current bookkeeping and accounting costs.

How do you start a Prec?

To set up a PREC, you’ll need to engage a lawyer to create a transfer agreement to transfer your assets from your sole proprietorship into the corporation, as well as to draft and file articles of incorporation and related resolutions.

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What is a real estate holding company in Canada?

A holding company is a company that isn’t active. This means that the company doesn’t produce any goods or services, but it can hold shares of other companies and investments. This can include your own operating company, shares in public companies, real estate, market securities and so on.

Should a real estate agent incorporate?

New real estate agents would be wise to seriously consider incorporation. You may end up much better off at the end of the tax year. You’ll be protected against some types of liability from client claims. You’ll be able to arrange your expenses in a way that makes sense.

Should I open a Prec?

If your annual income is significantly greater than sufficient to meet your annual expenses, and you’re looking for additional tax-savings and other income-generating opportunities, then it’s a great idea to incorporate your business with PREC.

Can a Prec be a numbered company?

Unlike professional corporations, there are no requirements that the name of the PREC include any specific words. However, the name shall not suggest that the PREC is trading or dealing in real estate or is a real estate brokerage or team. In that a PREC can be a numbered company.

What should I name my Prec?

For a PREC, it’s best to go with ‘Your first name/first initial, your last name, Professional Real Estate Corporation. ‘ A lawyer can help advise you on appropriate names that are likely to be approved.

How do I incorporate a PREC in Ontario?

Before completing your Articles of Incorporation, it’s recommended that you first send your proposed PREC name to RECO to confirm that it meets the rules they have set out. You can send the legal name of your PREC to before setting it up.

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