Taxes

Real Estate Agent Taxes, Salaries & Commissions

Marin Perez

There are more than 108,000 real estate agents in Canada, according to the California Real Estate Association. Here's what you need to know about real estate agent taxes, salaries, commissions and deductions.

What's the average real estate agent salary?

Real estate professionals in Canada earn on average $60,000 per year, according to PayScale. Market conditions and the agent's level of experience may affect this figure. Here are some real estate agent salary ranges:

     
  • Salary: $36,799 - $120,00
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  • Bonus: $503 - $39,732
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  • Total Pay: $35,000 - $121,010.

Using the national average of $60,000 as a baseline, level of experience would likely affect earnings as follows:

     
  • Entry-level: - 3 percent
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  • Mid-Career: + 17 percent
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  • Experienced: + 54 percent.

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Real estate agent commission rates

You set your commission rates when signing an initial contract. You can negotiate these rates if you wish. Determine rates as a percentage of the sale or on an hourly basis.  Depending on the situation of the local real estate market, the price of the property, and the company a realtor works for, commissions may vary. A realtor's commission for a $600,000 home in Vancouver could be:

     
  • 7 percent on the first $100,000
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  • 5 percent on the remaining $500,000
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  • Total = $24,500 + applicable taxes.

Smaller companies charge lower commission rates. Realtors may reduce commission rates in competitive markets.

Real estate agent, salesperson or broker: What's the difference?

Real estate terminology is different in each province or territory. There can be real estate agents, salespersons and mortgage brokers.  A mortgage broker helps people find financing for real estate transactions. A "real estate salesperson" is a term out of Ontario. These people generally receive less training than a registered real estate broker.  The CRA defines an "agent' as someone who trades in real estate on behalf of a "broker." Real estate agents may be self-employed or an employee of the broker. Use these factors to determine your worker status:

     
  • How much the broker controls the agent's activities
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  • Does the agent pay for their own advertising?
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  • Does the broker determine commission rates?
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  • Can the agent hire their own staff?
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  • Does the broker require specific tasks of the agent?

Reporting income as a real estate agent

Your employment status impacts how a real estate agent should report income. Some of the CRA's criteria for real estate agents are listed above.  There are also general guidelines to help determine whether an individual is an employee or self-employed worker. A real estate agent may also operate as a sole proprietorship or as part of a partnership.  It's important to figure out which designation applies so that taxes are filed properly. Make sure you're correctly deducting your employment insurance (EI) and Canada Pension Plan (CPP). You must deduct EI and CPP from your pay if you're an employee.