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 (a salary component, training pay, 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, desk fees, 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.
Part 3A - Gross sales, commissions or fees: Add up every commission you received during the tax year, including referral fees and bonuses. If you’re GST/HST-registered, enter it with the GST/HST included, then back that out on the next line. The form carries the result to line 8299.
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 administration fees when your statement shows the gross commission. If the brokerage only reports your net share, you’ve already left the split out, so don’t deduct it again
- 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 worldwide taxable supplies exceed $30,000 in one calendar quarter or across four consecutive calendar quarters, GST/HST registration is generally mandatory. The effective date and registration deadline depend on which test you meet.
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
Home-office costs and brokerage desk fees are separate expenses. You may be able to claim both when each was incurred to earn business income and no amount is counted twice. Check what the brokerage fee actually covers.
If you work from home regularly - taking calls, doing paperwork, meeting clients - and your home office is your principal place of business (the place your business is mainly run from - a facts test, not a fixed percentage), 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, classify the fee based on the service shown on the brokerage statement. See our home office and brokerage desk fee guide before completing the claim.
Vehicle expenses
Driving is the job. Showings, open houses, client pickups, property inspections - it adds up fast. On the T2125, you claim it one way: actual costs × business-use percentage.
Track all vehicle costs - gas, insurance, maintenance, lease payments or CCA on a purchased vehicle, 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. Parking for showings is claimed in full, not at the percentage. For 2026, passenger-vehicle caps limit lease payments to $1,100/month (before tax) and loan interest to $350/month.
There’s no per-km option for commission agents. The rates you’ll see quoted (around 70¢/km) are the CRA’s automobile allowance rates - what a brokerage could reimburse an employee tax-free. They aren’t a deduction method on the T2125. Our actual-expense method guide explains the difference.
You need a mileage log for the percentage and receipts for the costs. 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% cap covers almost everything an agent spends on food and entertainment. The narrow exceptions (like meals you bill to a client and show on the invoice) rarely apply.
CPP: you’re paying both halves
As a self-employed agent, you pay both the employee and employer portions of CPP contributions. For 2026, it’s 11.9% on net self-employment earnings between $3,500 and $74,600. Above that, CPP2 adds 8% on earnings up to $85,000.
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.
The CRA may require quarterly instalment payments when your net tax owing is more than $3,000 for the current year and either of the two preceding years. The usual due dates are March 15, June 15, September 15, and December 15.
Organize your T2125 records before filing
Accountly is built for self-employed Canadians, including real estate agents. Record income and expenses, keep receipt images, and generate a T2125-ready report. Reconcile the entries with your commission statements and bank records before filing.
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?
It depends on the working relationship. Self-employed commission income is generally reported on Form T2125. Employment income reported on a T4 goes on the employment-income lines of the T1 instead. An agent with both types of income may report both, but the same income is not reported twice.
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?
Potentially. They must be separate eligible costs, the home workspace must qualify, and no amount can be counted twice. Review the brokerage statement and keep the home-office calculation with your records.
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.
Official CRA references
Check the CRA’s Form T2125 and business expense guidance against your tax year and circumstances.
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.