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Ontario Introduces The Personal Real Estate Corporation (PREC) – Real Estate and Construction – Canada – Mondaq News Alerts




Ontario Introduces The Personal Real Estate Corporation (PREC)

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On October 1, 2020, the Government of Ontario filed Ontario
Regulation 536/20, Personal Real Estate Corporations
(“Regulation 536/20“), under the
Real Estate and Business Brokers Act, 2002, SO 2002, c 30,
Schedule C (“REBBA 2002“). Regulation
536/20 allows realtors in Ontario to incorporate Personal Real
Estate Corporations (“PRECs“) and
establishes the regulatory framework with respect thereto. Realtors
now join other professionals, such as medical doctors, lawyers and
accountants, who are permitted to earn income through a
professional corporation. This post provides an overview of
Regulation 536/20 and addresses some of the potential benefits of a
PREC to a realtor.

Regulation of PRECs

Pursuant to Regulation 536/20, a PREC must be incorporated under
the Ontario Business Corporations Act, RSO 1990, c B.16.
The PREC’s sole director, sole officer and the controlling
shareholder must be registered under REBBA 2002, or exempt from
registration, and must be employed by a real estate brokerage to
trade in real estate. The PREC itself cannot carry on the business
of trading in real estate other than by providing the services of
its controlling shareholder to the brokerage. The PREC is only
permitted to receive remuneration pertaining to trading in real
estate from the controlling shareholder’s brokerage. Likewise,
the controlling shareholder is only permitted to receive
remuneration pertaining to trading in real estate from the PREC or
from the brokerage by which the controlling shareholder is

Benefits of PRECs

If used correctly, a PREC can assist a realtor with tax
planning. Instead of all annual income being taxed at the
realtor’s personal marginal income tax rate, income retained in
a PREC will initially only be taxed at a corporate tax rate.
Presently, the combined federal and Ontario personal income tax
rate is over 53% on income over $220,000 whereas for Canadian
controlled private corporations entitled to take advantage of the
small business tax deduction, the current combined federal and
Ontario tax rate is only 12.2% on income up to $500,000. Thus there
is the potential for considerable deferment of taxes.

Retaining earnings in a PREC may allow for personal income to be
“averaged” over several years. The real estate industry
can be volatile and realtors are usually only paid on commission.
As such, a realtor may have a sizeable income one year and less
income in the following years. If one year results in particularly
high earnings, those earnings can be retained in the PREC and paid
out to the realtor over the following years, rather than being paid
to the realtor by the brokerage in the year in which they were
earned. This may result in the earnings being taxed at lower
marginal income tax rates over several years. The realtor also has
the option of being paid by the PREC through dividends rather than
through wages, which may provide additional tax advantages.

The PREC also allows real estate agents the ability to
income-split with the realtor’s spouse, child or parent,
subject to the more comprehensive rules regarding tax on split
income (which are relaxed for persons over age 65). Therefore, it
may be possible to pay amounts from the PREC to those family
members, who will presumably be taxed at a lower marginal tax rate
than the realtor.

Is a PREC Right for You?

In order to take advantage of the benefits that a PREC can
offer, proper planning is essential. A realtor must consider the
extra administrative costs associated with incorporating and
maintaining a corporation and weigh these costs against the
potential benefits of a PREC.

Originally published by Devry Smith Frank, October

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.

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Real Estate Tech Company Localize Raises $25M To Improve House Hunting – NoCamels – Israeli Innovation News



Israeli-founded real estate tech company Localize raised a $25 million Series C financing round led by Pitango Growth, with additional participation from Mizrahi-Tefahot and existing investors, the firm announced on Wednesday. The investment brings Localize’s total funding to date to $70 million.

Founded in 2012, Localize built a real estate market platform for buyers and agents powered by an AI-based insight engine that analyzes billions of data points on properties and neighborhoods. This creates “hundreds of selectable attributes, including proximity to popular stores – for example, Trader Joe’s, future construction, high ceilings, building violations, complaints and pests, and a proprietary natural light insight,” the company explains.

Homebuyers can easily tailor their searches with these attributes through a homebuying advisor called Hunter, the company’s hybrid human-AI concierge service. The company’s main mission is to make homebuying easier, more tailored, and more effective. It currently operates solely across New York, where the company has been based since 2018.

“The homebuying process is complex and the real estate industry as a whole has been slow to embrace technological change to address these issues. Most of the data available in the market today is too fragmented for buyers to effectively use,” said Omer Granot, President and COO of Localize, in a company statement. “We have developed products that are shifting the paradigm to empower prospective buyers and brokers to really fill in those information gaps and receive the assistance they need throughout the entire process, making us a partner from their initial search to receiving keys in hand for their new home.”

Localize is led by founder and CEO Asaf Rubin, previously with Taboola, Granot, who previously served as New York general manager and global VP of Growth for the Israeli-founded ride-sharing giant Via, and Ilan Fraiman who serves as CTO.

The company said in a statement that the newly raised funds will be directed toward further development of Localize’s existing services, R&D, sales and marketing operations, and the creation of complementary services to support the Localize ecosystem.

As part of the agreement, Chemi Peres, managing partner and co-founder of Pitango, will join Localize’s board of directors.

“Buying a home is one of the most important financial and life decisions many people make,” said Peres. “Localize enables people to find and buy the house of their dreams in a short time, using the advanced AI tools it developed. The ability to use tools that automate and digitalize this process, combined with insights that are produced using algorithms which run on massive amounts of data, makes the results quick, accurate, and fully fitted to the client’s needs.”

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Real estate agents can learn benefits of living shorelines | Coastal Review – Coastal Review Online



Oyster bag living shorelines effectively stabilize eroding shorelines and also preserve the coastal environment. Photo: Restoration Systems, LLC.

Real estate professionals are encouraged to join next month a workshop on the benefits of living shorelines for waterfront properties.

The free, online workshop is from 9 a.m. to 1 p.m. Sept. 2 via Webex. Organizers ask attendees join 15 minutes early to confirm their real estate license number. Registration before the event is required. The agenda is online.

Organizers plan to share the benefits and limitations of using living shorelines for erosion control, different shoreline stabilization techniques, including living shorelines, living shoreline permitting process; using marsh plants and oyster shell to prevent erosion; and living shoreline projects in North Carolina. 

Real estate professionals will receive four elective continuing education credits from the North Carolina Real Estate Commission.

Prior to the workshop, organizers ask attendees review the Virtual Workshop Best Practices.

The workshop is being presented by the state Department of Environmental Quality, North Carolina Coastal Federation and North Carolina Sea grant.

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Tight real estate inventory and lower sales in the capital region in July – Times Colonist



A shrinking number of properties for sale in Greater Victoria is translating into fewer sales, despite strong demand.

“The real estate story right now continues to be inventory,” David Langlois, president of the Victoria Real Estate Board, said Tuesday as July sales statistics were released.

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At the end of July, there were just 1,270 listings — down by 52.1 per cent from the 2,653 properties on the market at the same time a year ago.

Inventory dropped by 7.6 per cent, or 1,375 listings, last month from the previous month.

“The market is driven by inventory and fewer home listings lead to fewer home sales,” Langlois said. “In that context, these numbers do not reflect a downturn in our market but reveal sales falling due to this continued trend of low inventory.”

A total of 835 properties sold last month, down by 14.7 per cent from the 979 sales in July 2020, the board’s report said.

Elton Ash, regional executive vice-president for RE/MAX western Canada, said the real estate market is returning to normal patterns, as sale are typically lower in July and August after a stronger spring.

He predicts inventories will rise in the capital region because that’s what happening in major markets across the country. “We are seeing inventory levels starting to increase. I’m confident we will see it higher in Victoria as well.”

Prices in the capital region have remained strong so far this year.

The benchmark price for a single-family home in the core was $1.082 million in July, up by 1.7 per cent from June.

A year ago, that benchmark was at $909,900.

Benchmark refers to the value of a home in a particular area over time, a method the real estate industry says more accurately reflects the market than average prices.

In May, the benchmark price for a single-family house in the core topped $1 million for the first time, although the average price had surpassed $1 million previously. The core consists of Victoria, Esquimalt, Oak Bay, Saanich and View Royal.

For many people, a single-family house in the core area is financially out of reach, a factor driving condominium construction and sales. Condos are typically less costly than a single-family house.

The benchmark value for a condominium in the core in July was $535,100, an 8.1 per cent increase from $494,900 in July 2020, the board said.

Langlois said it’s important for the long-term health of the housing market that the region maintains a “strong focus” on developing new homes to meet growing demand.

For the Vancouver Island Real Estate Board, north of the Malahat, where inventory is also tight, 450 single-family homes were sold, down 15 per cent from 531 in June. In the condo apartment category, sales dropped by seven per cent from June. However, row/townhouse sales rose by 29 per cent from the previous month.

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