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How to Know Tax Deductions for Real Estate Agents?

How to Know Tax Deductions for Real Estate Agents

Real estate tax payments also need to be paid like other taxes; otherwise, you might get red-flagged by the government when you do your taxes at the end of the year. You’d be better off paying more in taxes than getting audited. However, you can always be best off with real estate agent tax deductions to keep a very accurate logbook. 

You also have client parties or appreciation events that you might host. Those are all expenses that are tax deductible, and then a certain percentage of the client gifts you give on a possession date are also tax deductible.

Accountant or Bookkeeper for Real Estate?

SG INC CPA recommends hiring an accountant and a bookkeeper for real estate agent tax deductions. Because both of those expenses are tax deductible anyway, however, let’s dig into the details here. 

It is like when you want to have a separate credit card set up for your personal and business so that it’s very easy to keep both expenses separate. When you go to purchase your gas, or you go to purchase meals and entertainment, use your business credit card. It makes your bookkeeping process much simpler. Well, that’s easy.

What are the Most Common Property Tax Deductions?

Tax deductions with general agent real estate are easy to go if you know the real estate agent tax deductions. If you have learned these examples of tax-deductible expenses, your quest on how to become a real estate agent will be fulfilled.

The most common real estate tax-deductible expenses are:

  • For sale signs
  • Billboards
  • Open house signs
  • Office Supplies
  • Photography
  • Staging
  • Lawn care

Tax Deductions on Uncommon Areas

There are also some real estate agent tax deductions, such as

  • Minor repairs for one of the listings that you currently have.
  • Lock boxes.
  • Your brokerage fees.
  • Licensing fees with the governing body.
  • MLS fees for whichever real estate. board that you’re a part of
  • Business cards.
  • Feature sheets.
  • Facebook and Google pay-per-click advertising, as well as any social media management company you hire, will do some of this work for you.

Tech-pertaining Tax Deductions

 Employees are tax deductible in the real estate coaching or training you invest in and websites you currently host. Contact Retention Management Systems (CRMs) with cloud storage like Dropbox or Google Drive are under real estate tax deductions. 

You pay for storage, and real estate agent tax deductions are also available. You can also apply for general agent real estate for a system like Zoom or any other telecommunications software system that you use to support your business, which is tax deductible.

General Expenses Deductibles

Memberships for networking groups you’re a part of to help meet other people in the community are also deductible for realtor taxes. You can get the membership exempted from taxes that supply goods or purchase a realtor open house. If you own any company convention or travel-related expenses that you use, they are also under tax exemptions.

Travel and Dine Tax Deductions

Even with the travel, SG INC CPA flourishes some unconventional tax deductions from a real estate agent.

Travel: If you use it by plane, boat, train, car, etc., traveling for business, then those expenses and meals about those travel expenses are all tax deductible.

Entertainment: If you’re going out for lunch, coffee, or supper with a client or a potential client. Even if you’re renting out the box seats at the local hockey game and inviting a group of your clients to show up, those are all entertainment expenses and are tax deductible.

Home office expenses:

Home office expenses

You’ve got a percentage of the utilities, property taxes, mortgage interest, and fire insurance for your home. Upon all these, you can write off as a business expense. Home office furniture or anything you buy for your local home office is also tax deductible. Your cell phone bill and your internet expenses are also tax deductible. 

Vehicle expenses: You have the fuel you pay for, the car wash, oil changes, car insurance, and even some depreciation. Now, you should keep a logbook so that you know exactly how many kilometers you have dedicated for business versus personal. However, you can also use a simpler system and budget for it at the end of the year to make tax returns available.  

Quick Tips For Real Estate Tax Deductions

As a matter of fact, you should probably go ahead and do monthly installments and prepay your tax account to the government ahead of time to make sure that you budget for that. SG INC CPA advises its clients to have a separate savings account at their bank to make sure that they allocate that percentage of their income that does not technically belong to them. You also track your incoming paydays and monitor your commissions.

Check with the following questions?

  • What do you have for the current active listing? What do you have for current active buyers?
  • What do you have for current pending transactions that are still conditional upon financing or home inspection?
  • What do you have for deals that have recently removed conditions that are upcoming for possession dates?
  • What do you have for possessions that have recently closed that haven’t yet been paid out?

You need to track all of these things so that you can then go ahead and budget somehow for what you have for incoming gross commission income. It also helps you budget your time on a daily and weekly basis for how much you need to be involved in lead generation activity to help bring that next transaction if you can’t already foresee it coming.

Final Thoughts:

In the closing thoughts, SG INC CPA finalizes the conclusion that you should pay your taxes on time or early to avoid penalties. The strategy is also ideal that you’re paying your taxes ahead of time to save taxes when you could technically be reinvesting that money. 

Meanwhile, you should track real estate agent tax deductions to avail savings and deductions accordingly. It could be earning a bonus on that money as well as savings. This way, you can increase your tax returns on the real estate agent deductions category.

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