Tax Tips for Real Estate Agents
Whether you’re just getting started in Real Estate or you’re a seasoned pro we have some tax strategies that can benefit you come April 15th!
For the new Real Estate Entrepreneur
Step one is to get yourself organized! For many people it’s hard to separate themselves from their business especially when they are the face of the business. Making sure to set up a separate business checking account is key to tracking your revenue and expenses cleanly. Linking that account to a tool like QuickBooks Self-Employed can also give you a clear snapshot of how you’re doing in your business. You will likely see more expense in the beginning for things like marketing and promotion as you get established in your market. You will also be spending quite a bit of time in the car! MileIQ or similar apps help keep up with all the tracking involved, so you can take advantage of every deduction possible!
For the Established Broker
You probably already have some good systems in place to keep up with your receipts and track your commissions! It never hurts to take a good evaluation of this and check new tools that may save you time and money. If you’re excelling and focused on the growth of you business it’s probably a good time to consider having someone help you with the day to day accounting. Making sure every expense gets recorded correctly and timely can help you make decisions fast! Considering a new entity structure can also make a lot more sense for Realtors. An S Corporation is a great option to minimize your tax liability!
Deductions every Real Estate Agent should be utilizing:
If you’ve made some big purchases the PATH Act may provide you with some additional tax deduction in the form of a Section 179 deduction. For example you can write off, up to $25,000 of the price of a new car for the tax year in which you bought it. There are certain limits to the type of vehicle that qualifies for this tax break, however, as well as limits to the amount of the allowable deduction.
Vehicle Expenses: Be sure to pay all auto related expenses from your business account. You can either deduct the direct expense or the standard mileage rate, which is 57.5 cents for 2020.
Travel Expenses: Try to book your business travel for conferences etc around a weekend. If you leave on Friday and return Monday the whole trip is still deductible and you have a weekend to enjoy a new city!
Home Office Expenses, even if you’re renting!
Client Gifts: You can deduct up to $25 per person.
Marketing Expenses; Website development, signs and flyers, business cards
Real Estate coaching and training expenses
Licensing and renewal fees
Real Estate Association Fees
Meals & Entertainment: You likely spend time taking your clients out! To write those expenses off make sure to write who you ate with, a brief note about what was discussed and snap of picture of that receipt for your files!
