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As of January 1, 2012, regulations were enacted that allow real estate brokers to incorporate a professional company (for purposes of receiving their remuneration).

Restrictions - Pursuant to such regulations, there are a number of conditions that must be met for a broker to incorporate, including but not limited to: (i) restrictions on the name of the company; (ii) restrictions on the holding of shares by certain persons; and (iii) the obligation of the broker to enter into an agreement with their agency.

Benefits - Often, the incorporation may provide the broker with income splitting opportunities resulting in tax savings, may allow the company to benefit from a lower tax rate (up to a certain threshold), and may provide the ability to defer the payment of taxes. As such, for certain brokers, incorporating a company can provide significant tax benefits.

Please do not hesitate to contact us if you have any questions.

Adam Saskin is a corporate lawyer at Spiegel Sohmer with extensive experience representing both early stage companies and investors.