The rush of tax season is overwhelming – we all know that. But for real estate agents who look after their finances by themselves, this rush of tax calculation and assessing the accounts is beyond any descriptive adjective.
To help you with the preparation, I’m here outlining several tax deductions that will come in handy.
Deduction 1: Home office
If you are running your real estate venture out of your home, you can take full advantage of this home office deduction.
Considering you are a self-employed real estate agent, you will find that the simplified home office deduction method maximizes the deduction.
By the way, for this deduction, you need to use your home office only for your real estate venture and nothing else. This implies, your kitchen cupboard, your master bed, your almirah, etc. won’t be counted as deductible expenses.
Deduction 2: Commissions Paid
I bet you know about this but still, let me jog your memory.
When you do deals with partners and other agents, you need to pay them a certain percentage or fixed amount as commission. This commission is fully deductible from business expenses.
This even includes agents or employees who work for you or under you.
Deduction 3: Desk fee
If you haven’t claimed your brokerage desk fee deduction, you will be eligible to claim this Desk fee or Home office deduction. Regardless of your licensing – whether you are hanging your license as a free broker or under a well-known national franchise, your desk fees will be deductible.
Deduction 4: Advertising and Marketing expenses
We all know how much impact online marketing has in today’s world. Nothing sells unless there is a dedicated team ensuring the message is being sent to the target audience. This is how dependent we are on online marketing. And due to its massive impact, real estate agents are spending more on advertising and marketing. Eventually, the expenses for online marketing are increasing.
Luckily, all of these marketing and advertisement expenses are deductible via the IRS’s (Internal Revenue Service) advertisement expense deduction. This includes the materials used for marketing, manpower for staging and equipment such as cameras and lighting, etc.
Due to its broad requirements, this advertising and marketing deductions are one of the best and you should not miss claiming the benefits.
Deduction 5: Education & Training
In the competitive world of real estate, one great way to stay ahead of your competition is learning.
By taking courses like BOLD, you can increase your potential as a real estate agent and also deduct the admission and tuition fees as well as certain transportation costs for the final tax calculation.
But there are few requirements for these fees to be deductible from the calculation. First of all, your courses must be related to real estate and nothing else. Secondly, these classes and courses that you are taking should only be taken to improve your skills and not an attempt to meet other real estate agents, brokers and mentors. There are dozens of more deductible costs, fees and expenses to consider before your tax calculation. I’ll talk about them in detail some other day. Till then, reach out to a good tax accountant to help you during the tax season.
