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Tips That Can Reduce Real Estate Pros’ Taxes

Many agents and brokers classify themselves as self-employed under federal tax guidelines. Income tax, is not automatically withheld from pay checks and generally must be paid through quarterly estimated tax payments. The IRS has moved the federal tax day to July 15, but in preparation, there are several things real estate pros can do to lower their tax bill.

Below are some tips:

Be sure to deduct any fees, licensing expenses, membership dues, and insurance premiums related to your job.

Compile records of any dues or fees you incur as an agent or business owner, such as MLS dues, real estate association dues, state license renewals, and brokerage desk fees. They are considered deductible business expenses.

Consider technology deductions.

Business equipment such as your computer, any software fees or purchases, office supplies, and even your cell phone are considered deductible expenses. Agents or brokers that permanently work from home may also be able to claim expenses related to maintaining their home office.

Deduct marketing and advertising expenses.

Marketing tactics can include physical materials like flyers, promos, and business cards, or digital materials such as website development, ads on Instagram, Facebook, Waze, or Google. Most of these costs are a deductible business expense.

Include classes and coursework.

To stay ahead of the competition and well versed in the latest trends in real estate, agents often engage in real estate coaching, seminars, and training. Registration fees or any other education-related costs can be deducted.

Realtor Magazine. (April 14, 2020). 6 Tips That Can Reduce Real Estate Pros’ Taxes.

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