Five Tax Tips for Your Real Estate Business as the Year-End Approaches

As the year draws to a close, real estate agents must start organizing their finances to maximize tax savings and ensure a smooth filing process.

Here are five tax tips to help you prepare and reduce potential liabilities:

1. Track Your Deductions: Account for all deductible expenses throughout the year. This includes marketing costs, office supplies, vehicle expenses, client gifts, and continuing education fees.

Use an expense-tracking app to keep all receipts and records in one place, making it easier to file when the time comes.

2. Maximize Retirement Contributions: Contributing to a Simplified Employee Pension (SEP) IRA or other self-employed retirement plans can help lower your taxable income while boosting your retirement savings.

Before the year’s end, ensure you’ve made the maximum allowable contributions to take full advantage of this deduction.

3. Review Your Home Office Deduction: You may be eligible for a home office deduction if you work from home.

This includes a portion of your rent or mortgage, utilities, and insurance. Ensure that your home office meets IRS criteria—it must be used exclusively and regularly for your business.

4. Prepay Business Expenses: Consider paying for next year’s expenses now.

This could include office supplies, marketing materials, or even professional memberships. By paying these expenses in advance, you can reduce your taxable income for the current year.

5. Consult with a Tax Professional: Tax laws are complex and frequently change. Consulting with a tax professional who works with independent contractors or real estate professionals can help identify deductions and credits you may otherwise miss.

By proactively managing your tax strategy, you can confidently close out the year and set yourself up for financial success in the new year.