Tax Advice for Real Estate Agents

Stephen Fishman Contributor These may not be the worst of times for real estate professionals, but they certainly are not the best either. To add insult to injury, it is now tax time. However, there's one thing you can do to help keep your head above water: Take all the tax deductions to which you are entitled.

Have you ever received a letter or phone call from the IRS pointing out deductions that you missed on your tax return? Me either, and as nice as some of those IRS folks are, I have a feeling we shouldn't wait for such a phone call.

If you earn commissions as a real estate agent, you must file your taxes as an independent contractor. You are entitled to deduct expenses related to generating your commission income. Report your self-employment income and deductions on Schedule C. Keep all receipts for the deductions you claim in case the IRS needs to audit your return in the future.

Real estate agents can spend a significant amount of money during the course of their work, both to maintain and expand their business. A large portion of these expenses are tax-deductible, but not all of them. Some common expense guidelines apply to most agents, however, it's always a good idea to check with a tax professional about your...

It's commonly know that real estate investors/owners often form an LLC - Limited Liability Company - or corporation. But it isn't as well known why agents would want to form an LLC or corporation for their own business. Real estate investors often form LLCs after purchasing one or more properties.

As a real estate agent, your gross commission is not salary. It's business revenue that must cover both your salary and your expenses. Manage it successfully with a sound tax strategy. By maintaining careful expense records, choosing a business structure that reduces tax and personal liability and claiming the full range of allowable deductions, you can enjoy significant tax savings and net more from each hard-earned commission check.

Advice on how to decide whether to incorporate your business as a limited liability corporation or an S corporation You've finally decided to start a business of your own. Or maybe you have been running one as a sole proprietor, even moonlighting on the side, and have decided you need to protect your personal assets from those involved with your growing business.