Are you a self-employed real estate agent or broker? Did you know that there are certain expenses that you may be eligible to deduct?
Most real estate agents and brokers are self-employed and file as a sole proprietor. So, generally speaking, taxes will not be withheld from commission earnings. Your broker will send you a Form 1099 at tax time which you will use to fill out your Schedule C, profit or loss from business. While you are permitted to deduct qualified business expenses from your commission earnings, it is very important to keep accurate, organized records and the supporting evidence to substantiate the expenses claimed. It’s also good practice to make sure personal and professional records are kept separate.
Non-deductible expenses for realtors include entertainment expenses, personal use of business equipment or vehicles, and personal expenses such as clothing, haircuts, dry cleaning, and so on.
Business-wise, deductible expenses for real estate agents can include office rent or a home office, office support expenses, advertising and marketing costs, business cards, and dedicated equipment, such as a computer, printer, or phone. Also deductible are professional memberships, fees, licenses, renewals, continuing education programs, legal and professional service fees, and your mileage–if you keep an accurate log.
There are also industry-specific expenses that realtors can deduct, including commissions paid to other agents, listing costs and MLS fees, photographer and staging fees, branded promotional items that cost less than $4 per item, business-related gifts under a certain limit, and more. And don’t forget, 50% of meals for business purposes.
Now take note, because if there are any vendors in which you’ve paid more than $600, you might need to issue a 1099. This can include landlords, photographers, stagers, marketers, website developers, referral fees, or an assistant who is an independent contractor.
For a complete list of deductible expenses for realtors and other helpful tax tips, visit our website or contact an Alloy Silverstein advisor today.
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Associate Partner
In Kelly's 30+ years of accounting and tax experience, she has worked with many closely-held businesses and business owners in the real estate, retail, professional service, not-for-profit, and agricultural industries.
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