Tax Strategies for Real Estate Agents


Your commission in the role of real estate agent does not replace your wage. The income from the firm has to be enough to pay not just your wage but also all of the other costs. Implementing a solid tax plan can help you effectively manage it. You can enjoy significant tax savings and keep more of each hard-earned commission check by keeping careful expense records, selecting a business structure that reduces tax and personal liability, and claiming the full range of allowable deductions. If you do all of these things, you will be able to reduce your tax burden.


It is permissible for you to deduct any desk fees that you pay to your broker. You are only allowed to take a deduction for one office space, even if you also use your home as an office. Pick the one that will save you the most money on taxes.

Keep Precise Expense Records

Keep track of receipts for any and all expenses that might be tax deductible. The cost of local real estate board dues, licence renewal and broker classes, desk fees, car expenses, cell phone, advertising and marketing, errors and omissions insurance that is not paid for by your broker, as well as the cost of business equipment and supplies that are not provided by your broker, are all examples of common items that fall under this category. Even things like meals, entertainment, and presents given at the end of a business transaction might be deducted.

Health Care Costs are Also Deductible

Instead of relying on your spouse’s employer-provided health insurance for you and your family, consider purchasing your own policy. This is especially important if you are married. The premiums ought to be tax-deductible so long as you are the one who is responsible for providing it and you do not employ a plan that is supplied by your broker. A real estate agent is eligible to deduct both their medical expenditures and their contributions to health savings accounts.

Form an S Corporation

If you are like the majority of real estate agents, you probably file your taxes as a single proprietor and as a consequence pay a significant amount of self-employment tax. According to Certified Public Accountant Mark Kohler in “7 Strategies Regarding Taxes That Every Real Estate Agent Ought to Know! By enabling you to “split salaries and profits,” a S company may help you pay less self-employment tax than you would otherwise.” In addition, a sole proprietorship puts personal assets open to risk, which may be mitigated by the use of a S company.

Plan For Your Retirement

Real estate career coach Brian Buffini gives agents strong encouragement to properly finance their retirement plans at the live seminars that he hosts across the country. Two types of retirement plans available are known as Keoghs and SEP-IRAs. Talk to someone who specialises in taxes to find out which kind is most likely to be to your advantage.

Home Office Deduction

Self-employment characterises the work of real estate agents. Since the real estate agent does not work for another company, the expenditures associated with maintaining a home office are tax deductible. This includes percentage deductions for all house expenditures, such as those for HOA fees, utilities, and other costs.

Section 179 Expensing

Depreciation is often done over a period of many years for business equipment, furniture, and other goods that are meant to be used for longer than one year. This includes items that are acquired for a home office or for your personal use at an office or day desk that your broker offers. Section 179 of the Internal Revenue Code of the United States permits you to deduct the whole cost of the aforementioned products from your taxable income in the same year that you buy them.