Rules change will ease personal planning
John Bermingham
Province
British Columbia‘s 19,500 realtors will now be able to hang out their shingles as corporations.
B.C. has become the first province to allow individual real-estate licences, starting Jan. 1, 2009.
The finance ministry changed the regulations to allow realtors become personal real-estate corporations, and run their practices as businesses.
Currently, B.C.’s licensed realtors operate as either employees or self-employed/individual contractors, working for real-estate brokerages.
Under the new rules, personal real-estate corporations will still need to be licensed, are subject to regulation by the B.C. Real Estate Council and will have to adhere to consumer protection standards.
The changes were hailed by the B.C. Real Estate Association, which represents 17,000 realtors.
Kelly Lerigny, past president B.C. Real Estate Corp., said the profession had been asking for the change since 2003.
“It’s wonderful to see government has come through,” said Lerigny yesterday. “The change is going to improve the tax planning for realtors.”
Lerigny said the option of having a personal corporation will help reduce the swings in commission income, when the housing market is hot or cool.
“They can do better planning from year to year,” she said.
It also has the potential to reduce taxes for realtors, she said, depending on their income levels.
High earners will be able to structure their practice like a business.
“They will do quite well and should be able to structure it like other professions,” she said.
The B.C. Real Estate Council, which regulates realtors, said it won’t affect the regulatory framework.
“I don’t think it’s going to really affect the individual consumer,” said the council’s executive officer, Robert Fawcett.
All realtors still have to affiliate with a brokerage, which will contract the realtor and his or her personal real-estate corporation.
And not all realtors will choose to form a corporation, he said.
New real-estate licensees must also wait two years before they can apply for corporation status.
Fawcett said mini-brokerages, which were originally set up to reduce the taxes for high-earning realtors, will probably now disappear.
“It might change the landscape a little bit,” said Fawcett.
© The Vancouver Province 2008