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Commission income, HST, deductions, and financial strategies for Canadian realtors.
Real estate agents in Canada are self-employed. Income is entirely commission-based and variable - there is no base salary. Understanding the gross-to-net journey of a commission cheque is essential for financial planning. Commissions are typically split between listing and buyer's agent (2-2.5% each in most markets), then further split with your brokerage.
| Market Tier | Avg Gross Commission/Year | Est. Net After Brokerage Split |
|---|---|---|
| New Agent (Year 1-3) | $30,000-$80,000 | $15,000-$50,000 |
| Active Agent (Year 4-8) | $80,000-$200,000 | $50,000-$140,000 |
| Top Producer (GTA/Vancouver) | $200,000-$600,000 | $130,000-$400,000 |
| Team Lead / Broker-Owner | $300,000-$1,000,000+ | $180,000-$600,000+ |
Real estate commissions are subject to HST. Agents registered for HST collect and remit 13% (Ontario) or the applicable provincial rate on their commissions. You must register for an HST number before your first commission if you expect to earn over $30,000. The brokerage typically handles the paperwork but you are responsible for your own HST remittances on your split of the commission.
As a self-employed agent, you claim Input Tax Credits (ITCs) on all HST you pay for business expenses - vehicle, advertising, office supplies, MLS fees, TREB/board dues - significantly reducing your net HST payable.
Real estate income is wildly variable. Top producers must be disciplined about setting aside 35-45% of every commission cheque for income tax, CPP, and HST. In a good year, maximize RRSP contributions to shelter income at the highest marginal rate. In a slow year, draw on TFSA rather than incurring debt.
Many successful agents incorporate after year 3-5, once net income consistently exceeds $100,000. A corporation allows income deferral inside the company at the 12.2% SBD rate, and provides income-smoothing through variable dividends in good and bad years.
Commission income comes in big chunks then disappears. KOHO gives you zero-fee banking, instant deposit notifications, and automatic savings rules to set aside HST and tax money the moment a commission hits.
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