Connect with us

Real eState

Introducing Personal Real Estate Corporations – Tax – Canada – Mondaq News Alerts

Published

 on


To print this article, all you need is to be registered or login on Mondaq.com.

Effective October 1, 2020, brokers and agents in Ontario can
incorporate personal real estate corporations (PRECs) to receive
remuneration for their services to their brokerage. The following
is a summary of PRECs and the relevant considerations that may
apply.

Why would I want a PREC?

The primary benefit of a PREC is the ability to defer income
tax. Without a PREC, agents and brokers pay tax at their personal
rate on the commissions they earn, which can be as high as 53.5% at
the top marginal rate. If paid to the PREC instead, the commission
will be taxed at the corporate rate of 12.2% on the first $500,000,
assuming the PREC is eligible for the small business rate. This
leaves you with more money to invest within the corporation. While
money you later take out of the PREC will be subject to personal
income tax, your accountant may be able to advise on additional
savings strategies, such as the payment of a salary or
dividends.

How do I know if a PREC is right for me?

If you would have funds to reinvest after paying your living
expenses and taxes, a PREC may be worth considering. You should
speak to an accountant and corporate lawyer to assess whether a
PREC makes sense for you.

What are the requirements of PRECs?

PRECs require the agent or broker to be employed (either as an
employee or independent contractor) by a brokerage, and to be the
only voting shareholder, the sole director, and the president of
the corporation. Non-voting shares may be held by other family
members. There must also be a written agreement in place to govern
the relationship between the agent, the brokerage, and the PREC,
among other requirements.

Are there any restrictions on PRECs that do not apply to
regular corporations?

There are several. The PREC may not carry on business as a
brokerage, nor can it carry on the business of trading in real
estate (other than to provide the services of the agent or broker
to the brokerage). This will restrict the use of the PREC to buy
and sell real estate. The PREC may only receive remuneration that
is associated with trading in real estate from the brokerage, and
the agent or broker can only receive such remuneration from the
PREC or brokerage. Furthermore, the PREC’s name and any
advertisements must not suggest it trades in real estate.

Can my existing corporation operate as a PREC?

Yes. However, this would involve amending the existing
corporation to turn it into a PREC. Alternatively, to achieve
greater flexibility you may wish to incorporate a second
corporation to operate as the PREC instead. Please speak to your
legal advisor for more information.

Does the PREC provide protection from personal liability?

It does not. While the PREC may receive commissions earned by
the agent or broker, it is not a vehicle through which he or she
provides services.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Tax from Canada

Let’s block ads! (Why?)



Source link

Continue Reading

Real eState

Manhattan's Real Estate Agents Take Up TikTok to Find Renters – BNN

Published

 on


(Bloomberg) — TikTok isn’t just a platform for dance videos and investment advice. It’s also a place to hawk Manhattan apartments.

New York real estate professionals are turning to the booming social media app to find tenants in a market where units are piling up amid near-record vacancies. For some, the 60-second videos have changed their jobs completely.

Madison Sutton, an agent at Highline Residential, had just 5,000 TikTok followers in October, when she decided to start taking the app more seriously. Today, she’s up to more than 90,000, and deals sourced from TikTok account for her entire business.

“It was just an immediate reaction,” Sutton said. “TikTok could give an accurate portrayal of the unit while keeping in mind overall convenience.”

Filling Manhattan apartments is especially tough these days, even as rents slide and landlords offer the biggest move-in incentives on record. The pandemic sent many city-dwellers fleeing for the suburbs, and newcomers are finding few reasons to settle down in New York’s costliest borough while nightlife venues are still dark and office towers remain mostly empty.

That’s made alternative marketing strategies like TikTok, which enable agents to connect with renters on their mobile phones, ever more essential.

Sutton said she fields about 45 calls a week from apartment-hunters who found her on TikTok, and she’s grown accustomed to conducting online tours for clients who might have come in person prior to the pandemic. She recently helped two roommates from Austin, Texas, find an apartment at Hudson Yards. They signed the lease without ever stepping foot inside the unit.

“They saw one of my TikToks of the unit, absolutely loved it,” said Sutton, who then gave them a full virtual tour.

Reaching Clients

TikTok uses an algorithm to tailor a user’s “For You” page to their interests — apartments with exposed brick and no brokers’ fees, for instance. A person who has stopped scrolling to watch a video about something related to New York real estate in the past might be shown one of Sutton’s the next time.

That allows agents to reach an audience of potential clients who probably wouldn’t have seen their listings otherwise.

Alexander Zakharin, managing director at GZB Realty, has close to 80,000 TikTok followers, ranging from 18-year-olds “not legal to drink but legal to rent,” to parents whose kids point them in his direction. Contacts through TikTok now make up 75% of his business.

“If you do it right, the algorithm allows you to explode,” said Zakharin, who joined the platform roughly a year ago.

In February, he closed a deal on a $11,000-a-month, two-bedroom apartment in Lincoln Square for a Russian influencer who found him on TikTok.

“There’s no doubt it has a benefit to the marketing process,” said Gary Malin, chief operating officer at brokerage Corcoran Group. “Anything that’s being consumed as much as TikTok is being consumed certainly helps expose property.”

But while TikTok can help show off apartments, leasing decisions for most people will come down to money, he said.

“Ultimately, what I think drives deals are the incentives and pricing that are being offered,” Malin said.

With people stuck at home spending more time on social media, the intimate and unvarnished videos on TikTok may draw an audience that hadn’t considered living in Manhattan before.

Sutton, who calls herself a “real estate influencer” on LinkedIn, recently helped a young professional find a place in Murray Hill. The client’s company had given her the option to relocate from Virginia, and she decided she wanted the New York experience — that “electric sense in the air that you can’t find anywhere else,” Sutton said.

“There’s a misconception that people aren’t coming back,” she said. “It’s the opposite.”

©2021 Bloomberg L.P.

Let’s block ads! (Why?)



Source link

Continue Reading

Real eState

Manhattan's Real Estate Agents Take Up TikTok to Find Renters – BNN

Published

 on


(Bloomberg) — TikTok isn’t just a platform for dance videos and investment advice. It’s also a place to hawk Manhattan apartments.

New York real estate professionals are turning to the booming social media app to find tenants in a market where units are piling up amid near-record vacancies. For some, the 60-second videos have changed their jobs completely.

Madison Sutton, an agent at Highline Residential, had just 5,000 TikTok followers in October, when she decided to start taking the app more seriously. Today, she’s up to more than 90,000, and deals sourced from TikTok account for her entire business.

“It was just an immediate reaction,” Sutton said. “TikTok could give an accurate portrayal of the unit while keeping in mind overall convenience.”

Filling Manhattan apartments is especially tough these days, even as rents slide and landlords offer the biggest move-in incentives on record. The pandemic sent many city-dwellers fleeing for the suburbs, and newcomers are finding few reasons to settle down in New York’s costliest borough while nightlife venues are still dark and office towers remain mostly empty.

That’s made alternative marketing strategies like TikTok, which enable agents to connect with renters on their mobile phones, ever more essential.

Sutton said she fields about 45 calls a week from apartment-hunters who found her on TikTok, and she’s grown accustomed to conducting online tours for clients who might have come in person prior to the pandemic. She recently helped two roommates from Austin, Texas, find an apartment at Hudson Yards. They signed the lease without ever stepping foot inside the unit.

“They saw one of my TikToks of the unit, absolutely loved it,” said Sutton, who then gave them a full virtual tour.

Reaching Clients

TikTok uses an algorithm to tailor a user’s “For You” page to their interests — apartments with exposed brick and no brokers’ fees, for instance. A person who has stopped scrolling to watch a video about something related to New York real estate in the past might be shown one of Sutton’s the next time.

That allows agents to reach an audience of potential clients who probably wouldn’t have seen their listings otherwise.

Alexander Zakharin, managing director at GZB Realty, has close to 80,000 TikTok followers, ranging from 18-year-olds “not legal to drink but legal to rent,” to parents whose kids point them in his direction. Contacts through TikTok now make up 75% of his business.

“If you do it right, the algorithm allows you to explode,” said Zakharin, who joined the platform roughly a year ago.

In February, he closed a deal on a $11,000-a-month, two-bedroom apartment in Lincoln Square for a Russian influencer who found him on TikTok.

“There’s no doubt it has a benefit to the marketing process,” said Gary Malin, chief operating officer at brokerage Corcoran Group. “Anything that’s being consumed as much as TikTok is being consumed certainly helps expose property.”

But while TikTok can help show off apartments, leasing decisions for most people will come down to money, he said.

“Ultimately, what I think drives deals are the incentives and pricing that are being offered,” Malin said.

With people stuck at home spending more time on social media, the intimate and unvarnished videos on TikTok may draw an audience that hadn’t considered living in Manhattan before.

Sutton, who calls herself a “real estate influencer” on LinkedIn, recently helped a young professional find a place in Murray Hill. The client’s company had given her the option to relocate from Virginia, and she decided she wanted the New York experience — that “electric sense in the air that you can’t find anywhere else,” Sutton said.

“There’s a misconception that people aren’t coming back,” she said. “It’s the opposite.”

©2021 Bloomberg L.P.

Let’s block ads! (Why?)



Source link

Continue Reading

Real eState

Windsor's real estate market is 'affordable' — but how affordable is it for Windsorites? – CBC.ca

Published

 on


Windsor’s real estate market is booming — but it has some Windsorites feeling left out, unable to seal the deal on finally owning their very own home.

“I’m probably never going to own a home unless the market crashes,” said 28-year-old Elizabeth Ward. 

Ward and her partner first started looking to purchase a home a couple of years ago, hoping for one within their $200,000 budget, but they quickly gave up, knowing they couldn’t compete with the bidding wars. 

“We kept looking and kept trying but had to give up because there’s no way that we could go anywhere near [$100,000], let alone the $200 and $300,000 that some houses are going over now,” she said. 

“So, we look and then we get discouraged, and then we give up.”

Working in retail, Ward makes between $30,000-$40,000 a year, but together with her partner, their joint income is around $60,000-$70,000. This gets them a pre-approval rate of about $200,000, which she says isn’t enough — even during their initial search two years ago.

“We’re both making like over minimum wage and this is still kind of where we’re at,” Ward said. 

‘Not affordable for the people who live here’

And yet, Windsor still has a reputation for being relatively “affordable” compared to other markets. 

According to the Canadian Real Estate Association, Windsor’s average house prices are going up, but are still below the average prices in other Ontario cities. (CBC)

In January, the average price of a Windsor-Essex home was $492,480 — an increase of 31.4 per cent compared to the same month last year. And yet, according to the Canadian Real Estate Association, that price tag is still less than the average January prices in the London area ($607,431), Hamilton-Burlington area ($787,840) or Toronto area ($967,885).

“We’ve been bragging about affordability for so long,” said Maggie Chen, a broker of record with LC Platinum Realty. 

“But is that what it is now? Is that what it is in 2021?”

Ward said it’s true Windsor is affordable — “but not for Windsorites.”

“It’s affordable for other people in the province. For the locals that live here, it’s not even close to being affordable,” she said.

“It’s affordable to the people with more money who live outside of Windsor.”

While Chen, who also sits on the board of directors for the Windsor-Essex County Association of Realtors (WECAR), couldn’t quantify what percentage of buyers are from out-of-town, she said that anecdotally — according to what she’s hearing from agents — most buyers are from outside of the region. 

What can an average income buy you in Windsor?

According to Windsor’s 2016 Census Profile from Statistics Canada, the average employment income in 2015 for full-year full-time workers in Windsor was $64,962, which was slightly more than incomes in London or Hamilton, but about $14,000 less than the average income in Toronto.

So, what can that income buy you?

According to Windsor mortgage agent Rasha Ingratta, today, a $65,000 income could get you a mortgage of about $300,000. 

However, in January 2021, out of 437 homes sold that month in Windsor-Essex, just 67 of them sold for less than $300,000, according to data from WECAR.

Rasha Ingratta is a mortgage agent in Windsor. (Submitted by Rasha Ingratta)

That means that for the average Windsorite, only 15 per cent of homes would have met their budget that month. Only four per cent of homes sold for less than $200,000 in January. It was a similar break down in February. 

Further to that, a new federal regulation came into effect in 2018 that puts every lender through a financial stress test, to make sure they can afford the mortgage they’re trying to take out. That’s raised the bar for all Canadian would-be home-buyers, not just those in Windsor.

There’s also been a real shift locally, Ingratta explained, in how much bang you can get for your buck. For example, she said, homes worth $200,000 five years ago could now be selling for more than double the price today. 

“If we can turn back time and the person that makes $40,000 a year, they can afford to buy that home,” Ingratta said.

“The $40,000 income person now is really giving up on purchasing a home here unless they have a co-signer or more of a down payment.”

‘Lower your expectations’

Looking forward, Chen doesn’t see the market slowing down.

“I used the word crazy in the very beginning of this market,” said Chen.

“Then I switched to insane. And now, I can’t even use that word anymore. The market is exploding.”

Broker of Record Maggie Chen says it’s tough, but it’s not impossible to buy a home on a tight budget in Windsor-Essex. (CBC)

Chen explained that many of her buyers are scared that if they don’t jump into the market now, they might not be able to afford it down the road. She acknowledges it’s especially challenging for young professionals and younger families.

A number of factors continue to drive prices up, including high demand and low supply. At the end of January, there were 421 homes listed on the market, which is the lowest number that month has seen in the region in more than 3 decades, according to the local realtors’ association. 

And with out-of-town buyers coming in, if they’ve sold a home in a bigger city where prices are higher, then they come to Windsor with an economic advantage that makes then better suited to play the bidding war game, which drives average prices up.

Chen said, it’s not impossible to enter the market on a tight budget, but it does mean people need to “lower [their] expectations.”

For example, Chen explained, $450,000 could have possibly bought you a 1,500 square-foot, raised ranch, single-family home in South Windsor five years ago — but not today.

“Something around $300,000, still, it’s not like it’s not possible,” she said. 

“It’s still possible, however the way the market goes, if that is your affordability, your budget, you might have to act fast — or the only option is to rent and leave that dream behind a little bit.”

Windsor still catching up to other cities, Chen says

Meanwhile, Ward continues to keep an eye on the market, but it continues to be discouraging.

Elizabeth Ward and her partner Kyle Snively qualified for a $200,000 pre-approval rate a couple of years ago, but say it wasn’t enough to compete. (Submitted by Elizabeth Ward)

“Honestly, it hurts,” she said. “I get very upset and overwhelmed by it pretty often.”

Not only are housing prices going up, but the cost of rent is also going up — it increased by about 8 per cent last year. She and her partner are looking at larger apartments to rent for their family, but Ward worries about what that will cost them.

“[It] makes us laugh when the banks go, ‘We don’t want you paying over what you can pay.’ But instead they’re forcing us to pay even more than that because rent is so much higher than a mortgage would be.”

As Ward hopes for the real estate bubble to burst, Chen doesn’t see that happening anytime soon. 

“Absolutely not. We are still catching up,” she said.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending