Best tax write-offs for real estate commissions?

Question

I’m a new real estate agent in NorCal with 22k in commissions in my first 3 months.

Any recommendations on how to reduce my tax liability at the end of the year? What are some good write-offs?

Daniel Hyman · Answer

@Carolína Ortega

Run a google search for schedule C. That should help. Along with the great suggestions mentioned above.

Basit Siddiqi · Answer

@Carolína OrtegaThere are many expenses that real estate agent's have to reduce their gross compensation income.Desk fees, MLS fees, travel, home office(if you qualify), Virtual assistants are a few of the many deductions that are available to agents.

Michael K Gallagher · Answer

Hey @Carolína Ortega welcome and congrats on the early success!  I'm not a CPA or Tax person so do your own Due Diligence on this one, but I myself have set up an LLC and filed for S-Corp Status.  Then your brokerage would just pay your LLC rather than you.  Essentially if you use something like Quick books online, or something similar it allows you to pay yourself a "reasonable salary" which you'll want to do some digging into your area of what that salary is.  But then essentially you pay yourself that income in a W2 type way where the SS, Unemployment etc is only applied to that salary portion.  The rest of your income you can take as a "distribution" which essentially means it is considered business income which only has income tax applied.  So its a good way to cut out a significant amount of "FICA" taxes.

Other than that I'd say the biggest things is to keep careful track of miles, thats a big deduction that does not come into play so much when applying for loans (at least I'm told by other agents/lenders).  Again Quick Books Online has a pretty nice app that can do this automatically for you.

Good luck and congrats again on the early success!