Real Estate Professional Fee
tax related question?
I have a full time job and I will also be working part time as a real estate salesperson. Are professional association fees, franchise fees and other expenses incured in the real estate business tax deductible? if yes, what income tax form will i report the expenses?
If the real estate broker is treating you as an independent contractor, then you will report your income on a Schedule C, and you can deduct any direct expenses associated with that income on that form. Additionally, you might be able to deduct health insurance premiums that you pay on your own (assuming you aren’t covered by a benefit plan at your full time job) as self-employed health insurance. If you will be treated as an employee by the real estate broker, you will need to report the expenses on a Form 2106, Employee Business Expenses. These expenses are deductible assuming you itemize, and also assuming you have enough of them and other miscellaneous expenses to exceed 2% of your Adjusted Gross Income. Go to www.irs.gov, and take a look at Schedule C, 2106, and Schedule A.
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A couple of years ago we saw the housing market rise to it’s highest ever where people were buying homes, condominiums and duplexes at exorbitant prices. Today with the economy in such bad shape, people are finding it hard to sell anything in the housing market making the real estate profession not so glamorous.
I live in Florida which is one of the highest states hit with foreclosures throughout the country. In my neighborhood alone there are numerous homes with for sale signs that have not moved in more than a year. Most people are hesitate in selling their home for many reasons, but due to the economy they are being offered less than the value their home is worth, therefore making less of a profit, if any at all.
The economy has effected major businesses in the housing market as well such as; construction companies, electrical contractors, plumbers and retail building suppliers. But the real estate industry has really taken the hit. You can see by all the unfinished neighborhoods, special projects and empty commercial properties that this has made a huge impact throughout the industry.
Real estate agents found it difficult to stay afloat and some simply bowed out of the profession altogether. As a real estate professional, whether an associate or broker maintaining your license to do business is mandatory. The fees associated in membership listings and continuing education courses can become a huge expense.
It is also mandatory that a broker open and maintain an office stated by the (DBPR), Department of Business and Professional Regulations. This can become extremely overwhelming and costly, especially if you don’t have sufficient associates or other real estate brokers to help off-set the cost. The expense in maintaining an office with utilities, insurance and marketing, are only a few expenses that make it difficult when income revenue sales are low due to a declining economic market.
Some realtor’s are turning their focus, time, and energy on rental properties or property management options. Those that can provide the skills managed to stay afloat by utilizing a different strategy. Some were even wise enough to purchase homes themselves turning them into rental properties which provides residual income. With so many families losing their homes, more people are turning toward rentals as opposed to purchasing a home.
With the laws changing constantly to protect the general public, and the lending institutions making it more difficult for people to borrow money to purchase a home, many real estate agents decided to change professions altogether.
Some real estate professionals, due to the cost of renewing their licenses, annual fees, declining sales, and the expense in promoting their business has chosen to put their licenses in an inactive status until the market starts to improves. However, they must still complete their continuing education course every two-year license period to keep their license.
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About the Author:
Home-based business owner, graduated from the Bob Hogue School of Real Estate, certificate of completion from Executive Forums Performance Management Program,Master Consultant WMI and CarbonCopyPro, visit my Blog at: www.simplesteps2financialfreedom.com or more information at www.successfulfinancialfutures.com
Article Source: ArticlesBase.com – Real Estate Professionals Looking For Increased Residual Income During A Troubled Economy
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