How do real estate agents build wealth beyond commission?

In the US, the IRS treats a sole proprietor as its own employer for retirement plans (IRS Publication 560, April 2026), so you can open a SEP IRA or a solo 401(k) and add a traditional or Roth IRA. In Canada, the RRSP and TFSA are the main accounts, on top of the Canada Pension Plan you pay into as a self-employed agent. How do real estate agents save for retirement without a 401(k)? has the 2026 limits and a table of what each US plan can take at three profit levels.

If a home becomes your main home and you own and live in it for at least 2 of the 5 years before you sell, you may exclude up to US$250,000 of gain, or US$500,000 on a joint return (IRS, September 2026). In Canada, there's no tax on the gain if the property was solely your principal residence for every year you owned it, but a gain on a housing unit you owned for less than 365 consecutive days is generally treated as business income (CRA, February 2026).

A rental is a passive activity unless you qualify as a real estate professional and materially participate in it, and the IRS counts brokering as a real property trade or business toward that test (IRS Publication 925, April 2026). Buying a property you could have listed brings code-of-ethics duties too: see Should a real estate agent buy the house or sell it?

Not in IRS terms. Interest, dividends and most royalties are portfolio income, and commission is personal service income, so neither counts as passive activity income (IRS Publication 925, April 2026). Above US$200,000 of modified adjusted gross income for a single filer, the 3.8% net investment income tax can apply to investment income (IRS, July 2026). In Canada, half of a capital gain is taxable (CRA, February 2026). What is passive income for a real estate agent that is not a rental? explains the difference.