The income of realtors is unique from other jobs; a majority of income is not made from a consistent paycheque, but rather a commission made from a successful sale. Commissions are most often paid by the seller, and split between the two agents, one that represents the buyer and one that represents the seller. Note that there is no fixed commission for a realtor in Ontario, but individual agents can set their own price (or brokerages if you are not self-employed). To stay competitive, there is usually a standard commission set for most sellers in the area. If you need assistance finding a seller or setting the right income expectations for yourself, contact Dely & Associates.

A PREC (or Personal Real Estate Corporation) gives a realtor the ability to receive their business income through a corporation. This has only been recently available in Ontario, and only applies to a real estate agent, not a real estate investor. One advantage of a PREC is that realtors can defer income tax. 12.2% tax rate for income up to $500,000, as opposed to 29.65% taxed at $50,000 for personally earned income. A PREC also allows many expenses to be tax deductible, and can create income splitting with family members. As a realtor, there are many advantages to setting up a PREC. If you need any help setting up a PREC, our experts at Dely & Associates can walk you through the process.

There are a few options when working as a realtor, and for many it may be working for an employer. This is a similar arrangement to many other jobs, where the employer pays and determines the tasks of the employee. There are some advantages to this, such as having health benefits and employment insurance. However, your business may take a percentage of your sales, your commission rate will be determined by the employer and you will have to meet a specific sales quota. When deciding to work for an employee or be self-employed, you would want to determine which pathway would be more fulfilling and financially beneficial for you. Dely & Associates can help you determine the financial advantages and disadvantages of being an employed realtor.

Being an independent realtor has its own benefits and potential drawbacks. You could be in charge of your own real estate business, set your own commission and choose which people to hire. You would also have to pay the necessary expenses for your business, pay for your own pension and health care and pay for any marketing or self-promotion. In terms of taxes, you could also deduct any business expenses, which makes being self-employed have potential tax benefits. Much like being an employed realtor, the decision may be determined by which career path would be more financially viable for you. If you connect with Dely & Associates, we can analyze the potential for self-employed realtors in your area, and determine if that is a pathway you should take. Don’t hesitate to contact us for financial advice. 

The significance of business expenses varies based on whether you are an employed or self-employed realtor.

Here are some examples:

  • Commissions paid can count as a business expense if you pay part of it to other agents or the business you are working for (or employees working under you if you are self-employed).
  • Desk fees can be deducted if you are employed, or a home office if you are self-employed. Self-employed realtors are also entitled to deductions on necessary office supplies, equipment and software
  • Education and training might be available to both positions if they are not done for the purpose of meeting educational requirements 
  • Marking and advertising expenses are also deductible, which is especially useful for independent realtors 

Whether you’re an employed or self-employed realtor, Dely & Associates can go through your business expenses to see which tax deductions you’re entitled to.

Why hire Dely & Associates?

Need help with accounting services for your business? Let the experts at Dely & Associates help you.

  • To eliminate errors while saving you time, money, and stress.
  • To assist with all finance-related work.
  • To retain a trustworthy source of support.
  • To help you make better business decisions.
  • To give you guidance while planning for the future.
  • To save you tax.
  • To help you avoid audits.
  • To facilitate CRA compliance.

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