Quick Tax Guide for the Self Employed in Real Estate

Published Thursday, April 13, 2023

If you are a licensed Real Estate Broker, you are considered an independent contractor or self-employed which means that you are a business owner that provides services to others and will be receiving a 1099. By being self-employed you may take all the money you receive up front, but you are still responsible for paying the Self-Employment Tax and income tax during the tax season. With that being said, it is important to set aside about 25-30% of your income to cover that. 

Although it may sound a bit intimidating there is an upside to all of that and that is you can write off many real estate business expenses on your taxes!

Here are some things that may qualify as tax deductions for a Real Estate Broker:

  •    Realtor dues and subscriptions
  •    Property promotions for your listings
  •    Seminars & workshops related to your real estate business
  •    Website & hosting fees that are applicable to your real estate business
  •    Legal fees
  •    Licenses and fees
  •    Commissions paid
  •    Desk fees paid to your real estate sponsoring broker
  •    E&O insurance
  •    Lead generation software
  •    Office supplies and business cards
  •    Phone bill
  •    Advertising
  •    Creative Assistance
  •    Car related expenses; parking, tolls, car insurance, car purchase, etc.
  •    Business meals, gifts, entertainment particularly for your real estate buyers or sellers
  •    Real Estate meeting related expenses
  •    Home office related expenses

-          And more…


Check out the websites below for more information and of course always have a conversation with your accountant on what is best for your situation.


Sources: 

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

http://https//www.irs.gov/newsroom/irs-reminds-taxpayers-of-april-estimated-tax-payment-deadline

https://www.keepertax.com/tax-write-offs/real-estate-agent

https://blog.stridehealth.com/post/real-estate-agent-tax-deductions

 

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  • Meet the Author: Vince DePaul


    Vince DePaul Vince DePaul is Director of Your House Academy. Vince began his real estate career in 1976 and is a real estate broker and a licensed real estate and continuing education instructor. He has taught real estate at College of DuPage in Glen Ellyn, Illinois, and Oakton Community College in Des Plaines, Illinois for several decades. For ten years he produced and hosted a weekly, live call-in radio broadcast in Chicago called “Your House” where he was known as “Mr. Real Estate.” In 2015, Vince received the prestigious Educator of the Year award from the Association of Illinois Real Estate Educators (AIREE). More about Vince »

A REALTOR® is a licensed real estate agent who is a member of the National Association of REALTORS®, (NAR) the largest trade group in the country.

Every agent is not a REALTOR®.  You become a REALTOR® after you pass your real estate course, pass the state license exam, join a real estate company and then join the National Association of REALTORS®.

According to the NAR, the term REALTOR has one, and only one, meaning:
"REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics."

Michael Fair, President and Director of Your House Academy is an NAR member.