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Real Estate Agent Tax Deductions

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Real Estate Agent with Exit Leon Crawford Realty
Real Estate Agent Tax Deductions
Submitted by: Kimberly Grant, Huntsville Real Estate Agent
Huntsville Real Estate Blog

Real Estate Agent TaxesSome thing I do for the first few months of the year is work with individuals and small business owners to prepare their tax returns.  In fact, thats why I have been missing from my regular posting on Active Rain for the past couple of months.  Often I am asked to look over previous tax returns and so often I see there are possible deductions and credits that are missed and go unclaimed.  Today, I ran across an article entitled "5 Tax Deductions Most Realtors Miss."  I thought it was right on target because I encounter the same thing not only with real estate agents but also other business owners.  I tell people all the time that being a real estate agent is EXPENSIVE and you should make sure that you claim all the deductions to which you are entitled.

Real Estate Agent Taxes

The author is an enrolled agent for the IRS and a certified financial planner.  He outlined the five things that most Realtors miss from their tax deductions are as follows:

  1. Personal Property Purchases
  2. Travel expenses
  3. Entertainment Expenses
  4. Home Office Deduction
  5. Using Family Members on the Payroll

Real Estate Agent Taxes
If you get a chance, check the article out for more information on these missed deductions.  I completely agree with him because I see these things missed all the time.  Everytime I bring up a lot of these items I always hear, "I didn't know that" or "Nobody ever told me that."  These are things that you can utilize as tax deductions.  However, when preparing the tax return if you have not kept track of these things during the year it makes it impossible to have accurate numbers.  Most of these deductions need to be substantiated with receipts or log books.  Even if you overlooked these deductions for preparing 2007 tax returns, we are still early in the year and you can begin keeping logs and records for next year.

 

 

Kimberly Grant
Realtor, Exit Leon Crawford Realty
Search Huntsville Homes for Sale

Mary Warren
Las Vegas, NV
Kimberly - thanks for the helpful information.  Next year I'm going to try and do our own taxes...I use to do them myself but haven't for about 10 years.  I'd of done them this year but I had to have our accountant help me with dissolving my corporation.
Apr 21, 2008 02:16 PM
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Kimberly, you are a woman of many talents.  I didn't know you had experience in this area as well.  Thanks for the tips in your article.  If we don't keep track of these details, we can't claim them.
Apr 21, 2008 02:55 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama

Mary, I am a big believer in leaving the tough stuff up to the professionals.  When it becomes beyond the spectrum of simple deductions you might want to consider going to someone that can do it quickly and get you the best return possible.  Same thing I tell potential clients... don't be afraid to get the help of a professional.

Apr 21, 2008 03:01 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama
Lola, its true.  A lot of things have changed.  Now in order to claim many things receipts and documentation must be shown.  Its because of those rotten apples that were dishonest with their deductions that ruin it for the rest of the bunch.
Apr 21, 2008 03:03 PM
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro
Kimberly, when you say personal property purchases what are you talking about.  Thanks for the helpful tips.  You are a woman of many talents.
Apr 21, 2008 03:33 PM
Ray Nellum
Envision Real Estate Group, LLC. - Fort Smith, AR
Fort Smith Real Estate
Kimberly, deduct, deduct and great tips.  It's always good to see if there is something I'm missing.
Apr 21, 2008 03:56 PM
Mana Tulberg
805 County Real Estate - Camarillo, CA
Real Estate Agent - Camarillo CA
Kimberly, Thank you, thank you, thank you. I have bookmarked this post for next year to make sure I have deducted everything. :0)
Apr 21, 2008 04:10 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama

Marchel, this is property purchased for use in business such as office furniture, computers, printers, etc.  Up to $128,000 can be written off for business and commercial rentals.

Apr 21, 2008 05:07 PM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

I think this is why it is so important to hire someone who specializes in taxes for real estate agents.

Apr 21, 2008 05:28 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama
Todd, I agree.  I don't just say that because I prepare taxes but you need someone familiar with all the different available deductions for real estate agents.  It is expensive to be in our business and I think we deserve to claim all the deductions we are eligible for.
Apr 22, 2008 08:25 AM
Elizabeth Cooper-Golden
Huntsville Alabama Real Estate, (@ Homes Realty Group) - Huntsville, AL
Huntsville AL MLS
Kimbery, You are multi-talented it seems! You should have never told my you did taxes...I'll be hunting you down next year! Looking forward to it, and thanks for the great tips. I'm thinking of putting  my 14 year old on the payroll. I may call you for some advice. Thanks again!   Elizabeth
Apr 22, 2008 12:30 PM
Selling Homes in Western New York, Licensed Real Estate Broker, Terri Kern
Turning Key Realty - East Amherst, NY
Terri Kern, Broker, Turning Key Realty

Thank you Kimberly,  you answered my question.  I do use it exclusively for my real estate business.  The office that is provided to me by the office if to manage their business.  So, based o that I do believe I would be able to still use the home office deduction.  Tax information is constantly changing.  I don't know how you keep up with it all.  I may turn to you for advice again.  Thanks!

Apr 22, 2008 12:37 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama
Elizabeth, I would be happy to assist you.  Feel free to call me at any time if you have any questions.  We still need to set up that lunch or coffee date too!!  :-D
Apr 23, 2008 03:55 AM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama
Terri, I'm glad I was able to help.  Yes tax information changes all the time.  I take A LOT of continuing education classes to try to stay up with about 1% of the changes.  LOL
Apr 23, 2008 03:56 AM
Chuck Willman
Chuck Willman - Alpine, UT
NewHouseUtah.com
Entertainment expenses... I knew I wasn't spending enough on that one!
Apr 24, 2008 05:22 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama

Chuck, LOL!!!  Yes you can deduct "BUSINESS RELATED" entertainment expenses.  Most of my entertainment expenses are for out of town buyer clients.  However, there are a number of expenses that fall into this category that you can deduct.

Apr 25, 2008 12:52 PM
Jeff Fritchie
silver legacy prop. - Oregon City, OR
Hi Kimberley, That is a great post. We have so many great tax deductions available to us.
Apr 25, 2008 03:41 PM
Kimberly Grant
Exit Leon Crawford Realty - Huntsville, AL
Real Estate Agent - Huntsville Alabama
That is true Jeff.  We just have to either have the knowledge of those deductions or allow someone trained in tax law to do it for us!!  There is nothing wrong with using a professional for these types of things.
Apr 26, 2008 07:40 AM
Selling Homes in Western New York, Licensed Real Estate Broker, Terri Kern
Turning Key Realty - East Amherst, NY
Terri Kern, Broker, Turning Key Realty

Hi Kimberly, Someone told me that you can use your 401k to purchase a home and if it is used to purchase a primary home you are not taxed on it.  I can't see how that could be true.  Could you clear this up for me?

May 02, 2008 02:51 PM
Toni Hogan
ToniHogan.com - Houston, TX
Hey Kimberly, looks like we have something else in common. Great post.
May 07, 2008 03:35 PM