Agents Realtors

Introduction

Are you a real estate agent still trying to wrap your head around taxes? You probably know you need to pay them on your income, but you may not be clear on how you're taxed or how to lower your taxes. In this blog, we will break down the types of taxes real estate agents pay, discuss some options for setting up your business, and explore how you can lower your tax bill.

Types of Taxes for Real Estate Agents

Let's start with how your tax as a real estate agent. Even if you work for a brokerage or an agency, you're usually still not considered an employee. Generally, you're an independent agent or broker working with the firm and being paid on commission rather than through a regular paycheck. For tax purposes, that means you're self-employed.

As a self-employed person, you'll pay self-employment tax, which is 15.3 percent on your business profits. This tax is made up of Social Security and Medicare taxes, which are normally deducted from your payroll for employees. You'll pay self-employment tax on top of your annual income tax.

You're also required to pay estimated quarterly taxes four times a year to the IRS and to your state if your state collects income tax.

Business Structure and Taxes

How you pay taxes as a real estate agent depends on how your business is structured legally. If you haven't formally organized your business with your state, you're a Sole Proprietor in the eyes of the law and the IRS. That means that you and your business and all of your business and personal assets are one, and you're taxed that way.

If you've organized your business as an LLC, by default, you're taxed like a sole proprietorship. Unfortunately, there's no automatic tax benefit to forming an LLC. However, as an LLC, you can elect S Corp tax treatment, which has some tax benefits.

When you're an LLC taxed as an S Corp, you don't owe self-employment taxes on your full income. Instead, you pay yourself a salary like you'd earn from a job, and you only pay tax on that portion. The rest of the money you make for the year is treated as profit, and you only have to pay income tax on that portion. This translation means you save 15.3 percent in taxes on a chunk of your income.

Tax Deductions for Real Estate Agents

Whether you're a sole proprietor, LLC, or LLC taxed as an S Corp, as a real estate agent, you're eligible to claim tax deductions for various expenses. These deductions can help lower your tax bill. Some common tax deductions for real estate agents include:

• Advertising costs
• Auto travel and car expenses
• Office cleaning and maintenance
• Commissions paid
• Insurance premiums
• Legal services
• Professional services
• Management fees
• Bank fees and loan interest
• Office supplies, equipment, and repairs
• Taxes and office utilities

By taking advantage of these tax deductions, you can effectively lower your taxable income and reduce your overall tax liability.

Conclusion

We hope this blog has cleared up some of your questions about how you're taxed as a real estate agent and given you a few ideas for how you can lower your taxes. If you need more help running your self-employed business, consider reaching out to Collective, the formation tax and accounting solution for self-employed people. They can assist you with your business formation, taxes, accounting, and bookkeeping needs.

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In retail real estate today, the franchise groups in your city or town could be a good source of tenant opportunity. That being said, franchise groups have special property needs that relate to a future lease. In many cases they will have a standard lease to reflect those occupancy conditions.

So if you are negotiating a lease with a franchise group type tenant, do not be surprised if they present their lease as that which they hope will suit your property and their occupancy.

The lease they give you needs to be fully reviewed and adjusted so that it includes the normal terms and conditions that a landlord would want in their property.

A franchise tenant in many cases will bring advantage to a retail property. Some of those advantages are:

A brand name that attracts shoppers or customers to the propertyA standard business model that is already proven in other locationsA group of franchise operators that are already trained in the business and will be given ongoing franchise group support.

No franchise group likes to see their brand suffer at the hands of a poor retailer or tenant. In that way they are very selective before lease discussions start with the potential operator of the business.

Will the franchise group be the lessee on the lease, and will it be the operator of the business as the lessee? There is no common rule here; generally the franchise groups today will only take out leases on highly sought after locations so they can protect their brand penetration. Most other ordinary locations will be a direct lease with the business owner that has taken out the franchise agreement.

Many leases that involve a franchise group will have to match the duration of the franchise business agreement that exists between the franchise group and the potential tenant. In essence you cannot have either without the other.

Landlords should for that reason be flexible with lease terms and option terms so the ideal match between the lease and the franchise business agreement can occur.

So what other things are likely to be special when it comes to a lease negotiation with a franchise type tenant? There are likely to be many but here are some of the main ones:

The size of the premises will be of a standard to allow the tenant to operate within the established franchise agreement.
The branding of the shop or tenancy will need to be standard to and in keeping with the franchise image. The landlord should allow the consistent brand to be installed into and around the property to attract the right customers for the shop or tenancy. On that basis normal rules that apply to marketing material in and around the property may need to be adjusted for the franchise tenant.
The franchise tenant and the licensor will be tracking sales numbers so they know that the business is thriving. That being said, the landlord should still ask for sales figures on a monthly basis so they know that the property and the tenancy are on track to a mutual success. This focus can be created in the lease document.

If a landlord is negotiating with a franchise type tenant, the landlord should make sure that their interests are protected by having a very good property solicitor to represent the landlord's position and requirements as the lease takes shape. A leasing agent understands the leasing process, but the solicitor can add real value to the process and help create a good lease document.

If you want more tips and ideas to help your commercial or retail real estate business you can get a free ebook right here at http://www.commercial-realestate-training.com/

John Highman is an expert real estate author, international conference speaker, and coach. He helps Real Estate Agents and Realtors around the World to improve their market share, negotiation skills, listings, and commissions.

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There are a lot of marketing strategies which can help you in selling your house fast. In this current era of science and technology, you can opt for far more than a normal "for sale" board or posters. Emergence of the trend of marketing through internet has now made available easier and faster means to sell your home when you think that I want to sell my house fast. Various agencies for online sales of real estate are a reasonable mean to rely for your purpose. Numerous things should be taken care for making sales faster.

Seeking help from realtors is one among the various methods available. A trustworthy realtor will provide you with a true estimated value of your property. They arrange meeting for you and various other buyers who are interested in purchasing your house. Many of them are ready to assist you even till the closing. Always think that if the plan you choose for selling will surely help you. If you decide to do it by yourself, you still have to prepare paper works and also find customers for your house. You may think that this is still better than having to make payments for a realtor.

Sometimes it simply seems to a myth because here also expenses are there. Even if you do not have to bear commission charges, advertisements are never free of cost. And since you are new to the field of carrying this sales business, more chance exists for unnecessary expenses. Printing of fliers and posters requires some cash. Option of putting your house in any auction listing is recommended if it is of a higher value and also highly desirable. Another method is selling by tender.

The process may not bring you enormous amount of profit but still a reasonable price it actually deserves. The last but not the least mean to consider is that whether the house is prepared for sale. The very first impression matters a lot. Paint your house, clean the yards and beautiful statues also help in increasing the value for your house. Also take care of the gardens. Hire contractors and do all the repair works including both the exteriors and interior works.

Even though you have many means, the very best and tension-free way is to opt for an experienced, popular and reliable real estate agency if situation demand for your thought "I want to sell my house fast".

If you are looking for a Residential online estate agents and sell my house quick then Fishneedwater can help. They have many properties to rent in many areas of London.

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Calling all Real Estate Professionals! We know that you work hard and that you know your markets; but, do you know how to maximize your accounting deductions, shelter your income through retirement accounts, and incorporate to avoid or reduce self-employment taxes or Alternative Minimum Taxes?

Whether an agent or broker, the type of business structure is one of the most important decisions that you will make when starting your business. Likewise, it is one of the most important decisions to re-evaluate as you grow. The IRS allows real estate professionals to incorporate their independent practice into an entity structure. The structure can be held in any allowed entity. The most common entities for real estate professionals are Sole proprietorship (non-incorporation), Limited Liability Corporations (LLCs), Sub-Chapter Corporations (S-Corps), C-Corporations, or inside of a Trust or Retirement Account. For the independent professional, the Sole proprietorship, LLCs and S-Corporations are the most common and appropriate choices; thus, we will focus our attention to those entities in this first article of three. Depending on your choice, you will be able to shelter income and avoid or reduce self-employment taxation, maximize expenses, and gain more of the money that you work so hard to make. Entities also provide liability protections when incorporated.

Under the most basic setup, the Sole proprietorship, is basically a non-incorporated entity that may set up a tax identification number (EIN). In some cases, the real estate professionals social security number can also be used instead of the EIN. This type of election will require the owner to paid self-employment taxes on 100% of their earnings, and the agent deductions could trigger the alternative minimum tax. Most agents who are not incorporated will fall under this structure. This structure provides no benefits in sheltering income, provides no liability protections and provides no maximizing of deductions.The benefit is that the record keeping is simple.

LLCs are not true corporations. LLCs are considered a lesser form of a corporation with the purpose of sheltering liability. LLCs can be considered a sole member or partnership, or a corporation depending on the taxation election made at the setup. The IRS considers the default to be a single member LLC or a partnership for two or more members. The corporation election choice is for a S-Corp. Election of the S-Corporation requires adherence to a strict period of time; thus, we recommend that you consult a tax adviser or attorney in this matter.

The LLC and Partnership models flow directly to the owners personal taxes and are subject to the same taxation as the sole proprietorship. The S-Corporation allows the LLC to be taxed as a corporation and a business loss or gain to pass to the owner(s) personal taxes. Gains are not subjected to self-employment tax; unless taken as a salary, and will not, in itself, trigger the AMT rates. It is recommended that a portion of the gains be taken as a salary or the owner could run the risk of the IRS not allowing the corporation deductions. This would trigger all gains as personal income and something to avoid!

LLCs are the simplest entity form to manage and provides excellent liability coverage for the real estate professional. The main difference between an LLC taxed as a S-Corporation and a company set up as an S-Corporation is that the LLC holds a member percentage and has reduced record keeping; whereas, the S-Corporation has shares of stock and requires more record keeping. Essentially, the LLC allows the benefits of a member based ownership that can be any percentage and hold as many members as desired. The S-Corporation, inside the LLC, supplies the best of both worlds by supplying the tax advantages of the corporation without the strict setup requirements of the S-Corporation. We will discuss those requirements next.

S-Corporations are a true corporation. The purpose of the S-Corporation was for small to medium size business owners to reduce and streamline accounting, record keeping, and taxations costs. Benefits of the S-Corporations includes a true corporation that allows reduction or avoidance of self-employment taxes by the use of K1 distributions of profit. Likewise, deductions are not limited to cost basis for tax deductions of expenses, liability protections are present with the corporate vail, and pass through of losses may be deductible from other income received or use as a carry-over to another tax year. K1 distributions gains are not subject to self-employment taxes allowing owners to shelter more income.

The S-Corporation has IRS requirements that must considered when determining whether this entity is the correct entity for your practice. The S-Corporation is limited to 100 shareholders. If the shareholders are more than 100, the LLC or a formal C-Corporation is the recommendation. Ownership percentage and shares must be proportional and equal percentages in the S-Corporation. There is a fiduciary part to the S-Corporation where the officers must act in the best interest of the owners.

We will continue our series of structures looking at the C-Corporation in our next article and the use of self-directed IRAs, and other retirement vehicles in our final article.

If you would like more information or a tax consultation services, please visit Charles H. Maness, Accountant or Kristen E. Richbourg, ESQ, Tax Attorney and Accountant at The Tax Advisers LLC. We can be contacted at 404-438-8642 or through the brokerage at 678-580-0470.

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The basics of taxation for real estate professionals depends on the real estate professionals goals and what steps they take to increase profits, decrease taxation, provide growth opportunity, and minimize risks. In the first series of the article set, we discussed the common vehicles used for solo, partnership, and small to medium size brokerages.

In this second series, we will address the use of c-corporations and the advantages and disadvantages of this type of business structure. Out of all the structures, c-corporations are the most complex and expensive to administrate. Record keeping, accounting, legal, and insurance all tend to be more expensive to administer. Before venturing into this type of structure, the shareholder(s) should understand that necessity of the time commitment and resources needed. At the very least, an accountant, attorney, and knowledgeable broker are a must.

All corporations are considered c-corporations unless a sub-chapter election is filed. C-corporations are primarily used when shareholder(s) exceed the threshold of s-corporations. Public trading is wanted or an Initial Public Offering is planned, and when there are franchising and growth accumulation for acquisitions.

As we learned in the earlier article, the maximum shareholders in an s-corporation are 100. In comparison to s-corporations, c-corporations have no limits in shareholders. Ownership also does not have to be equal and can be public or private. Public ownership is made subject to approval from the US Security Exchange Commission. Further, deductions for benefits are generally more lucrative for c-corporations vs. as s-corporation have limitations on deductions.

C-corporations have received a bad reputation for double taxation. Double taxation happens when the entity is taxed on the money that the c-corporation earns during the year and again when the dividends are paid to the shareholders. No dividends, no capital gains tax is paid; thus, no double taxation is present. The entity can normally prevent double taxation by zeroing or causing the profit to be near zero at end of the year. This is done by increasing salaries and 1099 payments to the employees, contractors and executives. It has been our experience that this strategy works best in private c-corporations and in public companies looking for growth opportunities.

The entity also enjoys a lower taxable rate on the first $50,000 dollar of income. Often the amount is less than that of an s-corporation. The rate for c-corporation on the first $50,000 is 15% vs. the rate on the s-corporations pass through to ordinary income taxes. The rate can vary and can be as high as 35%. Again, the costs for c-corporations can be very costly to administer; thus, a complete review and plan, with a knowledgeable accountant and attorney, is imperative to maximize savings.

Brokers and agents should assess what their desires and goals are. Do they want to create a small solo practice, a medium size or regional brokerage, or franchising or national company? The goals to begin with can help shape the finances for years to come; thus, before the broker or agent incorporates, they should consult competent professionals. Whether an LLC, s-corporation, or -corporation, there are advantages and disadvantages of each. You should perform due diligence to make the best and most informed decisions. This will help to make sure that your dreams can become reality!

If you would like more information or a consultation on professional management services, please visit Charles H. Maness, MSACC, Accountant and Managing Broker or Kristen E. Richbourg, ESQ and Accountant at The Tax Advisers LLC. Our number is 404-438-8642 or through our brokerage at 678-580-0470.

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I would like to introduce a few elements that caused the crash in real estate and to put things in perspective for homeowners and real estate investors:

Greed and Fear - greed being the stronger component

Real Estate is a leveraged investment when financed - it can appreciate or depreciate

Velocity of money - how fast money circulates in the economy - government and banks control this by using fractional reserves and policy

Government policy intervention - can change direction of investments pretty fast - foreclosure laws, ordinances

Real Estate - not a liquid investment - cannot be converted quickly into cash

Construction Real Estate buying - speculative investment as it took 1-2 years for homes to be built in a fragile market.

It began with our Federal Reserve injecting cash into the banks in preparation of year 2000, it continued with banks multiplying the effects by using lending and fractional reserves which increased the amount of money and the velocity of money. We had too much money chasing too few goods and at very low interest rates. This money had to be invested - it was irresistible for banks as they were making large profits and irresistible for the typical person as there was an abundance of cash/home equity and the possibility to multiply the wealth very quickly. The FED and the Banks created a monster and the speculative real estate investor was the accomplice.

When the FED and the Banks realized what happened, and tried to drain reserves and pull money out of the economy - they halted investments in real estate industry and brought everything to a halt and prices of real estate began crashing down. The banks cancelled the home equity lines for homeowners and speculators that were waiting for homes to be completed could not flip them and lost their investments. Prices continue falling because banks were leverage not 8 to 1 ratio, but they used special derivatives and basically they leverage 25-25 to 1, therefore in a falling home price scenario, they had to sell real estate investments faster and faster to raise equity so that they could meet regulatory requirements for capital. It was an impossible task and many banks have failed and they were taken over by the government at taxpayer's expense under the guise that banking was too important to the economy and they could not fail.

So the government has been injecting capital into the banks and other large firms to maintain status quo and in the process to save banking while the ordinary citizen would assume this debt as part of the American national debt. The ordinary citizen - the middle class person that did not speculate is suddenly hit by a higher debt owed to the government - why do we call it debt - because it has to be repaid via taxes, no equity left in the homes because of crashing prices in the neighborhood. Businesses were hurt as consumers were being cautious with their money and layoffs begin and increase due to less demand - unemployment grows - and it weakens the tax receipts by government at every level - they begin to reduce services and layoff people because they cannot meet their budgets.

Where do we go from here? It is both a personal question and a societal question. Unfortunately the government has it wrong over and over again because the people in power are very corrupt. They feel invincible, they feel as if we are their minions and they cater to a select group of people that believe money, power and prestige are more important then human value, common sense, education etc. Furthermore, they squander important resources trying to redistribute capital either via grants - yes grants as in free money to buy real estate or by subsidizing social programs which create dependencies.

Government has it wrong on both counts. Home ownership of real estate is very important and needs to be cherished and enjoyed by those saving and creating capital for investment and it is natural to expect a return on your hard work - a return on investment.

It is equally important for homeowners and investors to understand that leverage works both ways and it is much healthier and more solid to save the capital needed to buy a home and have continue saving to ensure that enough resources are available in case of a crisis. You can build a cash flow business with real estate - just don't do it too fast by taking on too much debt.

You will live a happier life and a healthy life if you can be very disciplined in real estate investing.

Call Fulcrum Realty LLC today and speak with Dorin Frai at 954-663-5944 when contemplating a real estate transaction in South Florida.

Dorin Frai has over 20 years of real estate experience coupled with banking and appraising experience and is very active in the South Florida real estate market. Whether you buy or sell call Dorin Frai with Fulcrum Realty LLC at 954-663-5944. We handle short sales, bank foreclosures, waterfront investments, luxury homes. Please register on our website at http://www.fulcrum-realty.com/ for more information.

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For starters, it's important to know that not all real estate agents and brokers are REALTORS®. Even though the name REALTOR® has become synonymous with real estate agent, it actually identifies a real estate professional that is a member of the National Association of REALTORS and has agreed to abide by their code of ethics as well as be governed by the National Association of REALTORS®.

In addition to the incredible arsenal of resources available to REALTORS® to help them serve you that non-REALTORS® simply don't have, you have the protection of the code of ethics as well as a grievance, or complaint process, if your agent doesn't live up to those standards.

Not all REALTORS® are created equal however. When selecting a REALTOR® don't just pick someone because they are a friend, neighbor or relative... treat the process like you would if you were choosing a doctor. If you needed brain surgery would you go to uncle Bob the dermatologist just because he's related? No. Well, REALTORS® have their specialties too; different markets, price ranges, types of property, etc. Select an agent that specializes in, and is experienced in, the type of house, area and price range you are interested in and that has the market data and resources available to them that will help you make an informed decision.

The REALTORS® website is a good place to begin as that will give you an opportunity to learn about their company, get a feel for their "style" and determine if their site makes it easy for you to search for homes, find the market data and info you are looking for or not.

Good things to ask the REALTOR® about would include:

What will your agency relationship be? This varies by state, but in general if you are a buyer you want an agent to represent you as a buyers agent and not as a transaction agent, sellers agent or dual agent. If you are a seller you want the agent working for you as a sellers agent.
Are there any fees that you will be charged other than the commission charged to you if you are a seller? Many companies today have transactions fees charged to buyers and/or sellers from around $200 up to $500 or more.
If they are full-time as well as what their background and experience are. I'm not saying all part-time agents are bad, but when the cost to you is the same, why would you possibly want to settle for "part-time" representation when you can have full-time representation? Also, it's good to know how long they have been in the profession, what their background is, etc. to assure they have the knowledge you and your transaction will require.

There's more, but this is a good start. Finally, when selecting a REALTOR®, you want to make sure your personalities mesh and that you feel you will enjoy working with the person. Buying or selling a home can be stressful enough in itself, the last thing you want is to add more friction to it because of a personality clash with your REALTOR®.

Dennis entered the real estate business straight out of high-school at the age of 18 and has now been in the business for over 33 years. He has been a member of the St. Louis Association of REALTORS® for 27 years, served as President of the St. Louis Association of REALTORS® in 2007, served as a director for the Missouri Association of REALTORS® as well for the National Association of REALTORS®.

Dennis is a frequent contributor to http://stlouisrealestatenews.com/ and has one of the best St Louis real estate sites at http://stlouisrealestatesearch.com/

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