It’s just crazy how BOOMING the market is right now.
With record low interest rates and a major shift from city to suburban life, the demand of buyers has increased tenfold.
Just about every real estate agent is incredibly busy. Cha-ching!
But as the money starts rolling in, the thought about how much tax you’re going to have to pay to good old Uncle Sam starts to creep in.
You wonder if there’s a way to pay less taxes on your income this year. Simple answer, THERE IS.
I’ll delve a little further.
What Are Some Tax Deductions That You Can Take Advantage Of?
Let’s face it the real estate market fluctuates yearly. The thought of making six figures a year is wonderful but it doesn’t always happen every year.
But no matter what your income is, it’s always good to take advantage of every tax deduction both legally and ethically.
Here are some last minute deductions you can take advantage of:
Commissions Paid Out-If you’ve paid part of your commission to another agent or any employee that works with you, this is deductible. As commissions add up pretty quickly, especially right now, this type of deduction should be at the top of your list.
Home Office– If you work out of your home or use part of it for business, as long as you use it consistently, it’s deductible.
Marketing and Advertising Expenses-This is one of the best deductions. As technology has evolved digital and online advertising is one of the best forms of marketing. Any type of staging, photography, signage can all be used as a deduction under the IRS advertisement expense.
Standard Auto-As a real estate agent, you spend most of your time in your car. Going to listings, meeting clients, business meetings. If you’re averaging over 10,000 miles a year, a standard mileage reduction would be quite beneficial for you.
Desk Fees– If you’re working under a franchise or with an independent broker, your desk fees are tax deductible. However, keep in mind that if you are claiming your home office as your place of business, you will not be able to claim your desk fee.
Meals-Traveling for business or dining with clients, you can deduct up to 50% of the bill including tax and tip.
Education and Training-If it’s related to your continued education to stay competitive and skilled in the ever changing real estate field.
Office Supplies and Equipment–Fax machine, computer, paper, pens, etc.
Fees, Licenses, Memberships, and Insurance-Annual fees such as state license renewal, professional memberships, MLS dues are deductible.
Software and Business Tools-Any software needed to run your business successfully is fully deductible.
You can learn more about the rules of deductions under the IRS Publication 535. But trying to figure out all the deductions you can get can be tedious. Reaching out to a professional with questions is always a good first step.
Need help figuring it out? Contact me today, I am here to assist you!