Tax Tips For Real Estate Agents and Brokers

Written by Posted On Friday, 03 April 2020 14:32
Tax Tips For Real Estate Agents and Brokers Tax Tips For Real Estate Agents and Brokers

Real estate agents and brokers receive commissions from sales transactions as their income. They aren't considered employees. They are independent contractors or self-employed sole proprietors. They don't have taxes taken out of their commission checks. They receive a 1099 Form at the end of the year. This status allows real estate agents and brokers to deduct many of their expenses from their real estate sales or property management work.

 

Keep Records of All Expenses

 

It is important for real estate agents and brokers to keep records of all of their business expenses. Many real estate agents use accounting software, such as the TurboTax Self Employed or Quickbooks Self Employed, to do this. This way they will have everything in one place on their computer for tax time. It is recommended to have a basic filing system for receipts, bills, credit card statements and other documents for your business expenses. Certain documents need to be kept in a file for several years such as documents for your car, office equipment, and office furniture. These depreciate and are deducted over time.

 

Commissions Paid to Other Agents or Brokers

 

Real estate commissions paid to other real estate agents or brokers who work under you are tax-deductible. If you are a real estate managing broker who takes in all of the commissions and pays your agents, this deduction should absolutely not be overlooked or forgotten.

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Most Common Real Estate Agent and Broker Tax Deductions

 

Marketing:

Real estate agents and brokers can deduct what they pay for marketing. This includes their for sale and for rent signs, open house signs, business cards, flyers, website development and hosting, mailers and more.

 

Education:

Real estate education is also tax-deductible. Real estate training classes, continuing education classes, and coaching are included. Real estate licensing and renewal fees are tax-deductible.

 

Dues:

Dues paid to the National Association of Realtors®, their state Realtor® association, and their local Realtor® association are tax-deductible. Another tax deduction is a real estate agent or broker's multiple listing service (MLS) dues. Any brokerage fees agents or brokers pay is a tax deduction.

 

Transportation:

A real estate agent's car purchases or leases are tax-deductible. Automobile maintenance and repairs are deductible. Their gas, mileage, automobile insurance and business-related parking costs are deductible, as well. Business-related travel expenses such as airfare, hotels or other lodging and meals are also deductible.

 

Home Office Expenses:

Whether a real estate agent or broker rents or owns their home, if they work out of a home office regularly they will most likely be able to take tax deductions for that. Agents must qualify to take these deductions. They must use a part of their home exclusively and regularly for their real estate businesses. It must also be their principal place of business where they regularly meet clients. It's important to ask a tax professional for advice on how these deductions work.

 

Gifts

 

Real estate agents and brokers may purchase gifts for their clients. Many agents give closing gifts to their clients. It is legal to give gifts to any party to a transaction. There are limits to these gifts, so important for them to ask their tax professional what is acceptable.

 

Charitable Gifts

 

Some real estate agents and brokers give a portion of their commissions to charities. Some sponsor and pay for or contribute to charitable functions. These are considered charitable gifts and are allowable as tax deductions.

 

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Professional Tax Advice

 

It is highly recommended that real estate agents and brokers obtain professional tax advice. It's a good idea for them to have their tax returns prepared by professional accountants. Many real estate agents and brokers have to pay quarterly taxes. Tax laws change year to year. Real estate agents and brokers are also responsible for paying self-employment tax. There is quite a lot involved in tax returns for real estate agents and brokers.

 

The good news is that real estate agents and brokers have a lot of options for tax deductions. Making the most of their tax deduction opportunities is vital so they don't pay more than necessary in taxes.

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Dean Cacioppo

Dean Cacioppo Credentials

Dean has worked as a real estate agent, real estate instructor and has years of experience working on the technology side for major Real Estate Brokers, Agents and MLS’s.  Dean has sat on the Board of Directors for multiple MLS’s including being elected to President.  Years of serving on a number of MLS Committees for multiple boards, served on the Strategic Planning Committee for Louisiana REALTORS and participated in many task forces and committees for the benefit of all Real Estate Agents in Louisiana.

Work in Real Estate Technology

Dean has provided live training on technology, direct IT and Technological Support to thousands of Real Estate Agents for over 16 years.  With years of being the go-to guy on technology strategy, training and support for Brokers and MLS’s across the country, you can now have direct access to Dean for your personal technology needs. 

Real Estate is extremely competitive on the web and we specialize in Real Estate Websites and Digitial Marketing for Realtors, Search Engine Optimization for Real Estate and Social Media Marketing for Real Estate.  Please don’t be confused, we are happy to work in all business verticals and have quite a bit of experience in a variety of markets.

For 2019, we have seen an expoetional increase in the ability to generate leads from local SEO for the real estate industry.  This has Google My Business taking a larger share of buyers and sellers looking for real estate online.  We understand that there is a real estate sales cycle that determines how "ready to act" the lead is.  Leads that are aquired for search phrases such as "Realtor around me" or "top realtor in my city" have a much better chance of converting than the indevidual searching for a generic real estate term.  

 

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