Real Estate Agents and people that are utilizing real estate for income and business purposes. Most often “self-employed” for tax purposes, this opens a variety of considerations as it comes to how to set up your business activities and the types of expense deductions that become available to you when properly tracked and substantiated.
Making sure you have a good system to keep track of all the components involved in your tax picture in order to maintain control of your tax liability at the end of each year can be vital to both your wallet and peace of mind.
Key Considerations for Real Estate Agents in Setting up a comprehensive Tax Strategy
- Deductions – Making sure you understand what can be deducted and which ones are most important for you to be tracking in detail will help set up a system to streamline a large part of managing your tax liability and save enormous amounts of time on the back end.
- Entity Selection – Structuring your business (around an S-Corp or LLC, for example) can have a variety of tax implications both positive and negative, and you want to make sure your choice provides the most advantageous position to your success.
- Estimated Taxes – It can be incredibly easy to save significant dollars on the penalties many incur for not paying estimated taxes, or paying them on the wrong time frame. A quality tax strategy provides both easy and more detailed ways to control and eliminate those penalties.
- Rental Real Estate – Owning and operating rental real estate opens up considerations to how the real estate is structured, potential depreciation deductions, and capital gain activity, among others. You want to make sure you’re proactively set up to deal with the implications around the finances your business maintains and the sale of your properties.
ATA Context – The Meat on the Bone
Real Estate Professionals stand to benefit more than most from a comprehensive tax strategy simply due to the nature of their business. By working with a professional to make sure you have a plan that considers your major tax events and ways to manage them, you will have the opportunity to see tax savings and increased net cash flow for many years in the future.
