One thing that I seldom hear much about is taxes in real estate. I think this topic deserves a lot more attention, and could well be the number one reason that so many agents fail. It is even forgotten in our listing appointments. In the USA, tax freedom day was calculated as April 9th, 2010, and in 2009 the
Canadian tax freedom day was not until June 6th, 2009. That means that on average, every cent earned went to the public coffers until that day, after which you kept everything you earned. This includes a myriad of hidden taxes such as GST, HST gas tax etc. Every year this date is extended later it seems and if the trend continues, we will all be servants of the government, not the other way around.
I’m not sure of the exact numbers but we need to remit taxes at a rate of about 26%. This is the minimum. If you are not remitting that monthly, you will have a nasty surprise when it comes time to pay the piper. Also, don’t forget to remit your GST monthly. This is the difference between what you received in GST payments and what you paid out in GST on expenses.
Dont' forget to demonstrate this to your sellers when you tell them where your income is going. Most seem to think that all real estate agents earn a king’s ransom, when the reality is quite different.
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