- Quick Answer: How to Set Up an Ontario PREC
- What Is an Ontario PREC?
- Who Can Set Up a PREC?
- Ownership Rules
- Setting Up Your PREC: Step by Step
- PREC vs Professional Corporation vs Standard Corporation
- Why Realtors Set Up a PREC
- What Does It Cost to Set Up a PREC?
- Common Mistakes to Avoid
- Not the Right Structure for You?
- Frequently Asked Questions
An Ontario PREC, short for Personal Real Estate Corporation, lets a real estate salesperson or broker registered with the Real Estate Council of Ontario (RECO) have their commission income paid to a corporation instead of directly to them personally. It’s been available since October 1, 2020, and it comes with a specific set of RECO ownership and conduct rules that don’t apply to a standard corporation.
This guide covers who’s eligible, how PREC ownership rules work, what RECO requires before your PREC can be paid, and what it costs to set one up in 2026.
How to Set Up an Ontario PREC
- Confirm you’re a real estate salesperson or broker currently registered with RECO; only registrants are eligible.
- Incorporate under the Ontario Business Corporations Act (OBCA), the same as a standard corporation.
- Structure ownership so you, the registrant, hold all voting shares and are the sole director and president; non-voting shares can go to family members.
- Sign an agreement with your brokerage that meets the requirements set out in the Trust in Real Estate Services Act (TRESA) and its regulations.
- Email RECO at PREC@reco.on.ca with your PREC’s legal name and address for service before it receives any remuneration.
- Never advertise using your PREC’s name; you continue trading and advertising under your own registered name with the brokerage.
A PREC itself doesn’t need to be licenced or registered with RECO as a separate entity, but the registrant does need to notify RECO of it and keep that notice current.
What Is an Ontario PREC?
A PREC is a corporation, incorporated under the OBCA like any other Ontario corporation, that a real estate registrant uses to receive commission income from their brokerage. It’s governed by the Trust in Real Estate Services Act, 2002 (TRESA), which is the renamed version of the former Real Estate and Business Brokers Act, 2002 (REBBA); the legislation was renamed and updated in phases, with PRECs introduced in the first phase (October 2020) and further changes taking effect December 1, 2023. The specific rules for PRECs are set out in Ontario Regulation 536/20.
Unlike a professional corporation for lawyers or accountants, a PREC is not a “professional corporation” under the OBCA’s professional corporation provisions. It’s its own distinct category, created specifically for real estate registrants and regulated through TRESA rather than through the professional corporation rules that apply to lawyers, doctors, or CPAs.
Key features of a PREC:
A PREC Cannot Trade in Real Estate Directly
It exists to receive remuneration on behalf of the registrant; it isn’t a brokerage and can’t represent clients or trade property itself.
The PREC Can’t Be Advertised
RECO requires that the registrant not represent to the public that the PREC carries on the business of trading in real estate, so the PREC’s name should not appear in any advertising.
The PREC Itself Doesn’t Need RECO Registration
As long as it meets the conditions in the regulation, the corporation is exempt from registration; it’s the registrant who notifies RECO about it.
It Can Hold Other Investments
A PREC can engage in business or investment activity outside real estate trading; what it can’t do is trade in real estate unless separately registered as a brokerage.
Who Can Set Up a PREC?
Only an individual currently registered with RECO as a real estate salesperson or broker is eligible to be the controlling shareholder of a PREC. The corporation itself doesn’t need any real estate licence, since the registrant’s own registration is what makes the arrangement work.
Ownership Rules
PREC ownership follows a specific structure required by the regulation, different from a standard corporation:
One Controlling Shareholder
The registrant must own all of the equity shares, which are also the voting shares, either directly or indirectly.
Sole Director and Officer
The registrant is the sole director and president of the corporation. A PREC can’t have a board of multiple directors or co-controlling registrants; a group of agents can’t jointly own one PREC.
Non-Voting Shares for Family Members
Non-voting shares can be issued to family members, such as a spouse, parent, or child, directly or through a family trust, which is the mechanism behind PREC income splitting.
No Unrelated Ownership
Shares can’t be held by other real estate professionals, business partners, or anyone outside the registrant’s immediate family in a non-voting capacity.
Setting Up Your PREC: Step by Step
Confirm Your Eligibility
You need to be an active RECO registrant (salesperson or broker) before setting up a PREC. If you’re between brokerages or not currently registered, resolve that first.
Choose a Name and Incorporate
Your PREC is incorporated under the OBCA the same way a standard Ontario corporation is. The legal name often includes “Personal Real Estate Corporation” as part of the corporate name, though this is a matter of naming convention rather than a strict requirement, since RECO’s rule is about advertising, not about what the legal name itself must contain. A NUANS report helps confirm your proposed name is available.
Prepare Articles That Meet the Ownership Rules
Your Articles of Incorporation need to reflect the single-controlling-shareholder structure and any non-voting share classes for family members. This is one of the areas where a generic incorporation template needs customisation; the share structure has to match what the regulation requires from the outset.
File with the Ontario Business Registry
The government filing fee is $155, the same as a standard Ontario corporation, with online processing typically completed within about 5 business days.
DIY vs. filing through a service: You can file yourself directly, but PREC share structures are one of the areas where getting it right from the start matters since restructuring share classes after the fact is more involved than setting them up correctly in the first Articles. Corporation Ontario (Ontario Corporate Filing Center) offers an Ontario PREC incorporation package built around these ownership requirements, if you’d rather have that handled.
Sign Your Brokerage Agreement
TRESA requires an agreement between you, your PREC, and your brokerage that covers how remuneration flows to the corporation and confirms the PREC won’t trade in real estate directly. Your brokerage will also want to satisfy itself that your PREC meets its obligations before it starts paying the corporation.
Notify RECO
Before your PREC can receive any remuneration, email RECO at PREC@reco.on.ca with your PREC’s legal name and address for service. If either changes later, you must notify RECO in writing within 5 days.
PREC vs Professional Corporation vs Standard Corporation
| PREC | Professional Corporation | Standard Corporation | |
|---|---|---|---|
| Who’s eligible | RECO-registered salespersons and brokers | Lawyers, CPAs, physicians, engineers, and other regulated professionals | Anyone |
| Governing framework | OBCA plus TRESA and O. Reg. 536/20 | OBCA plus the profession’s governing Act | OBCA only |
| Ownership | One controlling shareholder, non-voting shares to family only | Members of the profession, with a narrow family-share exception for doctors/dentists | Anyone |
| Directors | Registrant is sole director | Members of the profession | Anyone |
| Registration with regulator | PREC itself is exempt; registrant notifies RECO | Corporation typically needs a Certificate of Authorization | None |
| Can trade/practice directly | No, receives remuneration only | Yes, that’s the corporation’s purpose | Yes |
| Government filing fee | $155 | $155 | $155 |
Why Realtors Set Up a PREC
Tax Deferral
Like other Canadian-controlled private corporations, a PREC can access the small business deduction on active business income up to the federal business limit at a combined federal and Ontario rate meaningfully below personal marginal tax rates, deferring rather than eliminating tax until the money is paid out personally. Ontario’s small business rate and thresholds have seen changes in 2026, so confirm current figures with a CPA rather than relying on a fixed number here.
Income Splitting
Non-voting shares held by family members in lower tax brackets can reduce the family’s overall tax burden through dividends, subject to the federal tax-on-split-income (TOSI) rules, which limit how much of this actually works depending on family members’ involvement in the business.
Limited Liability for Business Debts
A PREC separates personal assets from the corporation’s commercial obligations. It does not shield the registrant from personal accountability for their trades and conduct; RECO discipline and consumer-protection obligations still apply directly to the registrant, PREC or not.
What Does It Cost to Set Up a PREC?
| Expense | Estimated Cost |
|---|---|
| Government filing fee | $155 |
| NUANS name search | $30–$65 |
| Legal review of Articles (recommended given the ownership structure) | $750–$2,000+ |
| Accounting setup for PREC compensation planning | $500–$1,500+ |
| Minute book / corporate supplies | $75–$200 |
The corporate filing itself costs the same as any Ontario incorporation. What tends to add up is the accounting and legal work to set up the share structure and ongoing compensation strategy correctly, since that’s where the real financial benefit of a PREC either gets realised or gets left on the table.
Common Mistakes to Avoid
Advertising With the PREC’s Name
RECO prohibits representing to the public that the PREC trades in real estate; you continue advertising under your own registered name.
Assuming the PREC Needs Its Own RECO Registration
It doesn’t, as long as it meets the regulation’s conditions; it’s the registrant who notifies RECO, not the corporation that registers.
Missing the 5-Day Notice Window
Any change to your PREC’s legal name or address for service must be reported to RECO within 5 days.
Structuring Ownership Incorrectly
Only one controlling shareholder is permitted, and non-voting shares can only go to family members, not business partners or fellow agents.
Forgetting to Notify RECO Before Receiving Payment
Your brokerage can’t pay your PREC until RECO has been notified of its legal name and address for service.
Believing a PREC Changes Your Personal Liability for Trades
It doesn’t; RECO discipline and consumer-protection accountability stay with you as the registrant regardless of the corporate structure.
Not the Right Structure for You?
If you’re not a RECO registrant, a PREC isn’t available to you; a standard Ontario corporation has none of these ownership restrictions. If you’re in a different regulated profession such as law, accounting, or medicine, you’d be looking at an Ontario Professional Corporation instead, which follows a similar profession-specific model under different rules. And if part of your goal is holding investments alongside your real estate income, an Ontario Holding Company is sometimes layered alongside a PREC for additional tax planning, though that combination needs its own advice from a CPA familiar with both structures.
Frequently Asked Questions
Who can set up a PREC in Ontario?
Only an individual currently registered with RECO as a real estate salesperson or broker can be the controlling shareholder of a PREC.
Does my PREC need to be registered with RECO?
No. The PREC itself is exempt from registration as long as it meets the conditions in Ontario Regulation 536/20. The registrant is responsible for notifying RECO of the PREC’s legal name and address for service.
Can I advertise using my PREC’s name?
No. RECO requires that you not represent to the public that the PREC carries on the business of trading in real estate, so its name shouldn’t appear in advertising. You continue to advertise under your own registered name.
How much does it cost to set up a PREC in Ontario?
The government filing fee is $155, the same as a standard Ontario corporation. Legal review of the Articles and accounting setup for compensation planning typically add $1,000–$3,000 or more, depending on complexity.
Can other real estate agents own shares in my PREC?
No. A PREC has one controlling shareholder, the registrant, and non-voting shares can only go to family members such as a spouse, parent, or child.
Does a PREC protect me from RECO discipline or liability for my trades?
No. RECO discipline and consumer-protection obligations remain the personal responsibility of the registrant regardless of whether a PREC is used. A PREC protects personal assets from the corporation’s business debts, not from professional accountability for trades.
Ready to Incorporate?
See Corporation Ontario’s PREC package for current pricing, or explore the Ontario Professional Corporation if you’re in a different regulated profession.
Start Your PREC Incorporation