Category Real Estate Agents
Tax Deductions That Real Estate Agents Should Be Taking
In the first part of our Tax Tips series, we talked about advising first-time homebuyers on deductions they're now able to take. But what about you, the real estate agent who helped those buyers to find their new house? Are you taking all the deductions to which you are entitled? According to the IRS, "licensed real estate agents are statutory non-employees and are treated as self-employed for all Federal tax purposes," providing that their income is earned via sales "or other output," rather than a salary. If that describes your situation, in addition to the usual deductions like property taxes and charitable contributions, there are deductions relating to your business that you may be able to take. That means you should be keeping your receipts throughout the year for expenses, including some you may not have realized were deductible.
Disclaimer: This article is solely a précis of information about deductible expenses that may be applicable to real estate agents. For advice on filing tax returns, you shouldconsult a CPA or an accountant.
Are there tax deductions you would recommend to your fellow professionals, based on your own experience? Why not share your tips in a BizPals status update?
Disclaimer: This article is solely a précis of information about deductible expenses that may be applicable to real estate agents. For advice on filing tax returns, you should
Advertising Expenses
As a realtor, you are entitled to deduct any business expense that is “ordinary and necessary” to make a profit. What expense could be more necessary than advertising for your real estate business? If those first-time homebuyers don't know about the great house you're listing, they can’t purchase it. Posters for open houses, print advertising, internet advertising via Google or Facebook, or banner ads placed on any website, business cards, and For Sale signs are all items that can be claimed as a tax deduction.Deducting Mileage
If you're like most real estate agents, you spend quite a bit of time in your car over the course of a year. Unfortunately, traveling to and from your office is considered to be commuting miles, and is not something that you should try to deduct. But costs involved in driving to temporary work locations are considered to be deductible travel expenses. Those temporary work locations could include driving to open houses, to meetings with clients, to closings, and to seminars and conferences. Many real estate agents who use their car for business and claim travel expenses use the standard mileage rate because it's simpler and takes less paperwork than deducting the actual costs for gas, maintenance, etc. You only need to keep track of the number of business miles that you drive every year. If you find keeping a record of your business mileage a bit of a chore, download a travel log app like Milebug, available for both iPhone and Android phones, to keep track of your deductible miles.Entertainment and Meals
Successful real estate agents like to go the extra mile to make their clients happy. A gift to a client at the end of a transaction is deductible, as are meals and entertainment such as taking a client to the ball game. But in order to claim what the Trulia Pro Blog calls "write-offs for treating your clients well," you need to discuss business at the lunch, dinner or event to which you take them. If you entertain clients and “non-business individuals” at the same lunch, you can only deduct the cost of lunch for your clients. Entertainment and meal expenses may be only 50% rather than 100% deductible, depending on the circumstances. It's a good idea to check IRS Publication 463 on Travel, Entertainment, Gift and Car Expenses for guidance on what and how to deduct.Miscellaneous Itemized Deductions
There are various expenses that can be grouped together and deducted as "miscellaneous itemized deductions" if and to the extent that these expenses, taken together, exceed 2% of your gross annual income. Items in this category include investment fees and expenses, fees to collect interest and dividends, and safe-deposit box rental if the box is used to store income-producing stocks, bonds, etc. You can usually also deduct tax preparation fees on your return for the year in which you pay them, specifically costs for electronic filing or purchase of tax preparation software. Tax advice fees are also deductible expenses included in this category.Receipts
In order to claim all the deductions to which you're entitled, you do have to keep receipts for the items you want to claim come tax time. Along with the receipt, it's a good idea to record details such as the name and location of the client involved in the expense. If you're afraid your desk drawer or shoebox will be overflowing by the end of the year, there are several apps available that will let you scan receipts. One well reviewed app is Pikkii for iOS, which turns pictures of your receipts into expense reports using an auto-shoot mode. The app can also utilize geo-locations to assign a name to the receipt based on the closest street address, and works with Evernote, Google Drive or Dropbox.Are there tax deductions you would recommend to your fellow professionals, based on your own experience? Why not share your tips in a BizPals status update?
SellYourHouseFast-InSook Uhm 
Mark Gross - Century 21 Astro 
Bobby Rai Real Estate Agent 
BellaMia Real Estate 
Katalin Horvath -Coldwell Banker 
No comments:
Post a Comment