Tax tips for real estate agents in Ontario

Start with how you are paid

The rules differ sharply depending on your status. Many agents are self-employed and report business income on Form T2125. Others are employees who are paid in whole or in part by commission. The CRA treats these differently, and the difference shows up in which expenses you can deduct and how much.

A commission employee can deduct certain expenses only if the employer completes Form T2200 and the employee keeps a copy. For most expenses, the total claim cannot exceed the commission income received that year, with exceptions for vehicle interest and capital cost allowance. A self-employed agent claims expenses on Form T2125 instead, and must show that each one was reasonable and incurred to earn income.

Status depends on the facts of the working relationship, not on what a contract is called. If you are unsure, our article on contractor misclassification explains the factors the CRA looks at, and the employee or contractor tool is a starting point for a conversation with an accountant.

Report commission income completely

Self-employed agents report gross commission on Form T2125 and deduct business expenses to arrive at net income. Keep a transaction-level list: the property, the closing date, the commission earned, any split paid to a brokerage or another agent, and when the money was received. Bank deposits alone rarely show these details.

The CRA says self-employed commission agents may use either the cash method or the accrual method to report income, while most other self-employed people must use accrual. Whichever you choose, apply it consistently and ask your accountant before changing it. If you receive a T4A slip that includes amounts you already reported in an earlier year, you generally do not claim that income twice; the CRA asks for a letter showing the amount and the year it was reported.

Your net business income also drives CPP contributions on self-employment income, which are calculated on the return. A strong year can therefore raise both income tax and CPP.

Charge GST/HST on your commission

The CRA states that a real estate agent who is registered for GST/HST has to charge and remit it on their commission and other services provided to clients, other than financial services. This holds even when the property itself is exempt, so a sale of a used home can still involve taxable commission.

The registration question turns on the small-supplier rule. Generally you must register once your worldwide taxable revenues, including those of associates, exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters. A single large closing can push you over in one quarter, and from that point you must charge tax on the sale that crossed the line. Because commission is lumpy, track your running total rather than waiting for year-end.

Once registered, you can claim input tax credits for the GST/HST paid on business expenses used to earn taxable commission. Reduce the expense you deduct on Form T2125 by the credit you claim. Our HST registration checker and our article on the quick method are useful next steps.

Expenses agents commonly claim

The general test is that an expense must be reasonable and incurred to earn income. The CRA’s business expense guidance includes advertising, annual licence fees, dues to keep a membership in a trade or commercial association, and subscriptions to publications. For an agent, that can cover advertising for listings, licence renewals, board or association fees and professional subscriptions. Check each against the CRA wording rather than assuming a category qualifies.

Some limits are worth knowing. You cannot deduct club membership dues if the main purpose of the club is dining, recreation or sport. Personal expenses are never deductible, and you enter only the business share of mixed-use costs. Capital purchases, such as expensive equipment, are generally recovered through capital cost allowance over time rather than deducted in full in one year.

Payments to a brokerage, assistants or referral partners should be recorded separately from other costs. The right treatment can depend on the written arrangement, so keep the agreements that explain who is paid what and why.

Vehicle, meals and home office

Driving to showings, open houses and signings is the largest mixed-use cost for many agents. You may deduct only the business share of vehicle costs, supported by a logbook of total and business kilometres. Our article on vehicle expenses and logbook rules explains how the full-year and simplified methods work.

Client meals are generally limited to 50% of the lesser of what you spent and what was reasonable, and the matching GST/HST input tax credit is limited in the same way. Keep the receipt and note who attended and why.

A home office qualifies in two situations: it is your principal place of business, or you use it only to earn business income and regularly use it to meet clients. The deduction cannot exceed your net business income before the expense, so it cannot create or increase a loss. Review our home office article before you claim a share of your home costs.

Set money aside and plan instalments

Commission is paid without tax withheld, so the bill arrives with your return. A practical habit is to move a fixed share of each commission into a separate account the day it is received, and to reconcile it against your actual tax estimate at least once a quarter. Our article on how much to set aside when you are self-employed shows one way to choose that share.

You may also have to pay tax by instalments. For 2026, the CRA says you generally must pay if your net tax owing is more than $3,000 for 2026 and also more than $3,000 in either 2025 or 2024. Business and commission income instalments are due March 15, June 15, September 15 and December 15. If you receive a CRA instalment reminder, check it against your own estimate instead of ignoring it.

For the 2026 tax year, self-employed returns are generally due June 15, 2027, but any balance owing is due April 30, 2027.

What to bring to an accountant

A useful first meeting needs a short list: your brokerage statements and commission splits, deposit records, your GST/HST registration status and filings, vehicle logs, receipts for advertising and fees, and details of any home office. Include notes on deals that are pending, because the year in which commission is reported depends on your method.

Raise structural questions before the year-end, not after. Some agents consider incorporating, which changes how income is taxed and paid out. Our should I incorporate guide sets out the questions to ask, and none of it replaces advice based on your own numbers. Describe your situation through the general enquiry form rather than sending identifiers or full financial files.