Tax Strategies for Real Estate Agents

As a realtor, your gross profit is not salary. It is business earnings that must cover both your wages and your expenses. Handle it successfully using a sound tax plan. By maintaining cautious expense records, choosing a business structure that reduces taxation and personal accountability and claiming the entire selection of allowable deductions, you may enjoy substantial tax savings and web more from each hard-earned commission check.

Expense Records

File receipts for every single expenditure that might be deductible. Common things include local real estate board dues, license-renewal and broker classes, desk fees, car expenses, cell phone, advertising and advertising, mistakes and omissions insurance not paid by your broker, and the cost of business supplies and equipment not supplied by your broker.

Health Care Costs

If you are married and your partner carries employee-paid medical insurance for your loved ones, obtain it on your own instead. Provided that you offer it for yourself and don’t use a strategy provided through your broker, the premiums should be tax-deductible. Realtors can also deduct medical expenses and health savings account contributions.

Form an S Corporation

If you are like most real estate brokers, you file taxes as a sole proprietor pay a hefty self-employment taxation because of this. According to CPA Mark Kohler at”7 Tax Strategies Every Realtor Must Know!” An S corporation may lower your self-employment taxation by permitting you to”divide salary and dividends.” Additionally, an S corporation can shield personal assets one proprietorship leaves vulnerable.

Retirement Planning

During his live seminars, real estate career coach Brian Buffini strongly encourages agents to fully fund their retirement programs. Keoghs and SEP-IRAs are two retirement-plan choices. Speak with a tax pro to learn which kind is likely to benefit you most.

Home Office Deduction

The higher-than-average audit speed of people who claim a home office deduction leaves some real estate agents afraid to claim it. That’s unfortunate, as it is a legitimate deduction for self reliant agents, even those whose agents offer office space, that may reduce taxable income appreciably.

Section 179 Expensing

Business equipment, furniture and other things intended to be used for more than a year, including those purchased for a home office or for your personal use at an office or day desk your broker supplies, are depreciated over numerous years. However, U.S. Internal Revenue Code section 179 allows you to deduct the entire cost of these things in the tax year that you purchase them.

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