Most real estate agents overpay on taxes or get hit with penalties — not because the rules are complicated, but because nobody told them what to actually do with a T2125. If you earned commission income this year, this is exactly how to file it.
Your document checklist
Before you touch the T2125, gather everything first. Missing one slip means amending later.
- T4 slips from your brokerage, if they paid you any employment income (desk fees, training stipends, etc.)
- Commission statements for every deal that closed — your brokerage should provide these, but cross-check against your own records
- GST/HST account number if you’re registered (more on this below)
- Mileage log showing date, destination, kilometres, and purpose for every showing, open house, and client meeting
- Receipts for every business expense you plan to claim — MLS fees, board dues, marketing, meals, office supplies, all of it
If you don’t have a mileage log, start one now for next year. The CRA won’t accept estimates.
T4 + T2125: the combo most agents miss
Something a lot of agents don’t realize: you might have both employment income and self-employment income in the same tax year. If your brokerage issued you a T4 for any reason — a salary component, a signing bonus, training pay — that income goes on your T1 return separately from your commission income.
Your commission income goes on the T2125 (Statement of Business Activities). These are two different tax treatments on the same return. Don’t lump them together.
If you only received commissions and no T4, you’re filing the T2125 alone. Either way, the steps below apply to your commission income. For a broader overview of self-employed filing, see our freelance taxes guide.
T2125 step-by-step: gross to net
The T2125 is simpler than it looks. The math is: gross commission income minus eligible expenses equals net business income. That net number is what you pay tax on.
Line 8299 — Gross sales/commissions: Add up every commission cheque you received during the tax year. Include referral fees you earned, bonuses, and any other payments tied to deals.
Part 4 — Business expenses: This is where you reduce your taxable income. Common deductions for agents:
- MLS fees and real estate board dues — fully deductible
- Errors and omissions (E&O) insurance — fully deductible
- Commission splits paid to your brokerage — deductible as “management and admin fees” or “subcontracts”
- Referral fees paid out — deductible if you have documentation (a signed referral agreement)
- Advertising and marketing — websites, signs, business cards, social media ads, photography
- Licensing and education fees — continuing education courses required to maintain your license
- Phone and internet — business-use percentage only
- Office supplies, software, and subscriptions — CRM tools, transaction management software, cloud storage
Line 9946 — Net income: Gross income minus total expenses. This is the number that flows to your T1 return and determines your tax bill.
GST/HST: the $30,000 threshold
If your total taxable supplies (basically your gross commissions) exceeded $30,000 in any rolling 12-month period, you’re required to register for a GST/HST account and charge tax on your commissions. You have 29 days from crossing that threshold.
Most active agents blow past $30,000 within their first few deals. Once registered, you charge GST/HST on your commissions, collect it, and remit it to the CRA — minus any Input Tax Credits (ITCs) you claim on business purchases.
If you registered voluntarily before hitting $30,000, you can still claim ITCs on expenses. That’s often worth it. We cover the details in our GST/HST registration guide.
Quick Method election: If your annual revenue (including GST/HST) is under $400,000, you can elect to use the Quick Method. You remit a lower percentage of your revenue and skip tracking ITCs on most purchases. For many agents, this saves money and time.
Home office vs. broker desk
You can claim home office expenses or a portion of your brokerage desk fees as workspace costs. Not both for the same work.
If you work from home regularly — taking calls, doing paperwork, meeting clients — and your home office is your principal place of business (meaning you spend more than 50% of your work time there), you can deduct a proportional share of rent or mortgage interest, utilities, insurance, and property tax based on the square footage of your office relative to your home.
If you pay for a desk or office at your brokerage, that cost is deductible as rent instead.
Pick the one that gives you the bigger deduction. For most agents working from home with a dedicated office, the home office claim wins. See our home office deductions guide for the full breakdown.
Vehicle expenses
Driving is the job. Showings, open houses, client pickups, property inspections — it adds up fast. The CRA gives you two options:
Actual expense method: Track all vehicle costs — gas, insurance, maintenance, lease payments or CCA on a purchased vehicle, parking, licence and registration. Then multiply total costs by your business-use percentage (business km / total km). If you drove 30,000 km total and 22,000 were for business, you claim 73.3% of your vehicle costs.
Simplified method (flat rate per km): Claim a fixed rate per business kilometre. For 2026, the CRA rate is typically around $0.72/km for the first 5,000 km and $0.66/km after that. Easier to track, but almost always a smaller deduction than actual expenses for agents who drive a lot.
Either way, you need a mileage log. No log, no deduction. The CRA is strict on this. Our vehicle expenses guide walks through exactly how to set one up.
Meals and client entertainment
Took a buyer out for lunch after a showing? Bought coffee for a client meeting? Those are deductible — but only at 50%.
The CRA caps meals and entertainment expenses at half the amount spent. A $120 client dinner means a $60 deduction. Keep the receipt and note who you met with and the business purpose on the back of it (or in your expense tracker).
This applies to meals during out-of-town travel for work too. The 50% rule is firm — no exceptions for real estate.
CPP: you’re paying both halves
As a self-employed agent, you pay both the employee and employer portions of CPP contributions. For 2026, the combined rate is approximately 11.9% on net self-employment earnings between $3,500 and the annual maximum pensionable earnings (around $73,200 for CPP1).
On $70,000 of net commission income, that’s roughly $7,900 in CPP alone — on top of your income tax. The employer half is deductible on line 22200 of your T1, which softens the blow slightly, but it’s still a significant cost that catches first-year agents off guard.
Budget for it. Set aside 25-30% of every commission cheque for taxes and CPP combined.
Deadlines: June 15 file, April 30 pay
Self-employed Canadians get an extended filing deadline: June 15. But any taxes you owe are still due April 30. Miss that payment deadline and you’ll get hit with interest charges that compound daily.
The smart move: estimate your tax bill and pay by April 30, even if you file your return in May or June. If you overpay, the CRA refunds the difference. If you underpay and don’t file until June, you’re racking up interest the whole time.
If your net tax owing exceeded $3,000 in either of the two preceding tax years, the CRA will require you to make quarterly installment payments for the current year (March 15, June 15, September 15, December 15).
Get your T2125 done in 15 minutes
Accountly is built for self-employed Canadians — including real estate agents. Connect your accounts, categorize your expenses, and generate a T2125-ready report without the spreadsheet chaos. Most agents finish in about 15 minutes.
If you’re new to self-employed taxes, start with our complete guide to taxes for real estate agents for the bigger picture on bookkeeping, registration, and financial planning.
Frequently asked questions
Do real estate agents file a T2125 or a T4?
Most agents file both. If your brokerage issued a T4 for any employment income (salary, bonuses), that goes on your T1 separately. All commission income goes on the T2125 as self-employment income. The two are reported on different parts of the same tax return.
Can I deduct my real estate license fees on my T2125?
Yes. Licensing fees, continuing education courses required to maintain your license, and real estate board membership dues are all deductible business expenses on the T2125. Voluntary professional development courses are also deductible if they relate directly to your real estate business.
What happens if I didn’t register for GST/HST and I earned over $30,000?
You should register immediately. The CRA can retroactively assess GST/HST on commissions you should have been collecting, plus charge interest and penalties. The sooner you register and get compliant, the smaller the damage. Read more in our GST/HST registration guide.
Can I claim both a home office and my brokerage desk fee?
Not for the same workspace purpose. You can claim one or the other. If you do meaningful work from home (calls, admin, client prep) and your home office is your principal place of business, the home office deduction is usually larger. See our home office guide for the math.
How much should a real estate agent set aside for taxes?
A safe rule is 25-30% of every commission cheque, deposited into a separate savings account immediately. This covers income tax and both halves of CPP. If your income is higher (over $100,000 net), lean toward 30-35% to account for the higher marginal tax rate.
Is the June 15 deadline the real deadline for real estate agents?
June 15 is the filing deadline for self-employed individuals, but April 30 is the payment deadline. If you owe taxes, interest starts accumulating on May 1 regardless of when you file. File early or at least estimate and pay by April 30 to avoid interest charges.
The information in this guide is for general informational purposes only and is not intended as accounting, tax, business, or legal advice. Accountly does not provide professional services or act as your accountant, tax advisor, or lawyer. No client relationship is created by your use of this material. Always seek advice from qualified professionals who understand your particular circumstances before acting on any information contained herein.
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