Most real estate professionals operate their business as a sole proprietorship. This means that you are not someone’s employee, you haven’t formed a partnership with anyone, and you have not incorporated your business.

Statutory Nonemployees

Licensed real estate agents are statutory nonemployees and are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:

  • Substantially all payments for their services as real estate agents are directly related to sales or other output, rather than to the number of hours worked
  • Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes

This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output.

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.

 

Deducting Business Expenses

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.

  • What Can I Deduct?
  • Cost of Goods Sold
  • Capital Expenses
  • Personal versus Business Expenses
  • Business Use of Your Home
  • Business Use of Your Car
  • Other Types of Business Expenses

Note:  If you do not carry on the activity to make a profit, you must report all of the gross income (without deductions) from the activity on Form 1040, line 21. Special limits apply to what expenses for a not-for-profit activity are deductible.

What Can I Deduct?

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

Irs.gov

 

Call for more information: 772 380 0610