Tax Tips for Brokers and Realtors

It’s tax season again, which means you will want to make the most of your return. If you’re a real estate agent or broker, you are not considered an employee under federal tax guidelines but as self-employed. As a result, you can claim certain expenses for work purposes as tax deductions. While your accountant in Sandy can help you to file your taxes, it’s important to know how to get back all the deductions you are due.

Keep All Important Receipts

Real estate agents and brokers first have to invest before they can make money. Marketing a property is necessary prior to being able to sell it. Additionally, you have to market yourself as well to attract potential buyers and sellers and transport them to and from a property before you earn your commission.

Generally speaking, the costs you accrue from your work can be deducted from your Utah taxes. As a result, you must keep good documentation of these expenses throughout the year. There are various tools you can use online or right at your fingertips in the form of a smartphone app that help you to track your mileage and other expenses. This is essential business tax preparation for every year.

Keep Good Records

You should also keep all of your paper documents and receipts stored in a physical filing system. Some of these should be retained for a few years, such as any property that depreciates. For example, your car and office equipment are things you can deduct from your taxes in time instead of immediately. Keep all receipts you have for anything you own that depreciates over time.

How the PATH Act Affects You The 2015 PATH Act, also known as the Protecting Americans from Tax Hikes Act, gives real estate agents and brokers more relief when they make purchases related to their work. PATH changes to IRS Section 179 deductions as it allows you to deduct all or most of a portion of a purchase straight away, which allows you to save more money during the tax season. This can also improve your business tax preparation whether you do your taxes yourself or have a Utah CPA help you with them.

Notable Allowable Tax Deductions

As any accountant or business cpa would tell you, you should always take advantage of any tax deduction for which you are eligible. Even the smallest of expenses qualify as deductions, such as a ream of office paper you use to print out documents relevant to your real estate business. Furthermore, these things also do not necessarily have to be critical to your business. The following are common deductions that real estate agents and brokers can claim:

• Home office expenses, regardless of whether you own or rent your home
• Transportation, including your car purchase costs or lease costs, gas, mileage, auto repairs and standard maintenance, auto insurance and parking costs
• Travel expenses such as airfare, lodging, meals and other business or educational expenses
• Marketing, including sales and open house signs, flyers, business cards and mailers and development and maintenance of your website Real estate training, coaching and educational expenses
• Real estate licensing fees and renewal of license fees
• Real estate association dues, desk and brokerage expenses and multiple listing service fees

It’s important to remember that in order for anything to be considered tax-deductible, your real estate business expenses must be directly related to your work, necessary and normal for your business and within a reasonable amount. You can also consult with your CPA to further simplify things for you.