What is a PREC?
A personal real estate corporation (PREC) is a Canadian legal entity that allows an individual to own and control real estate in their name. The PREC can be used to hold title to one or more properties, which can include both residential and commercial real estate. There are several benefits of using a PREC, including tax savings, asset protection and more control over your property investments.
How can we help?
While forming a PREC, realtors have to make a number of complicated decisions. But don’t worry, utilizing our decades’ worth of experience, we will help you make those decisions. At CPA4IT, we focus specifically on maximizing your financial benefits to help you retain more of your hard-earned income. Click here to book a FREE consultation with our experts to discuss this further.
Benefits of a PREC
PRECs are popular among real estate investors for a number of reasons. Perhaps the most important reason is the tax benefits that PRECs offer. By holding title to your property in a PREC, you can take advantage of corporate tax rates, which are often lower than personal tax rates. This can save you money on your overall tax bill.
Another benefit of using a PREC is asset protection. When you hold title to your property in your own name, you are personally liable for any debts or liabilities associated with the property. If someone were to sue you, they could potentially seize your personal assets, including your home or other properties. However, if you hold title to your property in a PREC, your personal assets are protected from creditors.
Control over Property Investments
Finally, using a PREC gives you more control over your property investments. For example, if you own multiple properties in your name, each property would be subject to probate if you passed away. This means that your family would have to go through the legal process of distributing your assets, which can be time-consuming and costly. However, if you hold title to your properties in a PREC, your family can avoid probate altogether.
How to maximize the benefits of a PREC?
A personal real estate corporation (PREC) can be a powerful tool for holding and managing real estate investments. But there are some things to keep in mind if you want to make the most of this vehicle. Here are four tips to help you get the most out of your PREC:
1. Keep your PREC up to date
Your PREC should be current with the latest changes in real estate law and practice. Be sure to review your governing documents regularly and make any necessary updates.
2. Use a licensed real estate professional
A licensed real estate professional can help you navigate the complexities of owning and managing a PREC. They can also provide valuable advice on how to maximize the value of your real estate holdings.
3. Have a clear investment strategy
Before you purchase any property, be sure to develop a clear investment strategy. This will help you make sound decisions about what properties to buy and how to finance them.
4. Stay focused on your goals
It’s easy to get sidetracked when you’re managing a PREC. But if you want to be successful, it’s important to stay focused on your goals. This means keeping an eye on the bottom line and making sure that your investments are working for you.
Following these tips will help you get the most out of your PREC. But remember, like any investment, real estate comes with risk. Be sure to do your homework and consult with a professional before making any decisions.
If you are still uncertain about whether you should form a personal real estate corporation, don’t worry, we are here to help! As a family-owned business, we take pride in helping small businesses grow. We have over three decades of combined experience helping realtors such as yourself manage their finances and generate success. In order to discuss this further, make sure to book a FREE consultation with one of our experts by clicking here.