Tax Tips for Realtors: How to Manage Finances and Reduce Tax Stress
Managing taxes can feel overwhelming for real estate agents, especially when transitioning from traditional jobs to running a fully independent business. In this episode of Hustle Humbly, CPA Karen Bahn joins us to share essential tax tips for realtors—from choosing the right business structure to maximizing deductions and planning ahead. These fundamentals help agents stay organized, reduce stress, and keep more of what they earn.
Start With Solid Financial Systems
One of the biggest mistakes new agents make is mixing personal and business finances. Karen recommends opening a separate business bank account and credit card to track expenses clearly. This simple step ensures accurate tax reporting and helps capture every eligible deduction.
Understanding When to Become an S Corporation
Many agents begin as sole proprietors, but once net income reaches $50,000 or more, forming an S Corporation can provide meaningful tax savings. S Corps allow realtors to split income between salary and distributions, reducing self-employment taxes and improving long-term planning.
Payroll, Salary, and Compliance
With an S Corp comes the responsibility of paying yourself a reasonable salary. Karen explains how payroll works, how to determine compensation, and why good bookkeeping is essential for IRS compliance.
Top Realtor Tax Deductions
Real estate agents enjoy a wide range of deductible business expenses, including marketing, home office use, vehicle mileage, client gifts, software subscriptions, training, and brokerage fees. Accurate tracking ensures you never miss a deduction you’re entitled to.
Planning for Quarterly Taxes
Since taxes aren’t withheld from commission checks, realtors must pay estimated taxes quarterly. Setting aside 25–30% of net income helps avoid penalties and reduces year-end surprises.
Should Realtors Lease or Buy a Car?
Karen breaks down the advantages of both approaches. Whether you lease or buy, tracking business mileage is essential, and the deduction method should match your overall tax strategy.
Stay Informed as Tax Laws Change
Tax laws shift frequently, and working with a CPA ensures you’re compliant and prepared. Karen shares how new regulations develop and why most changes take time to go into effect.
Final Thoughts
With the right systems and expert support, taxes don’t have to feel scary. These tax tips for realtors help agents stay organized, reduce liabilities, and build a more stable business. The key is proactive planning, thoughtful financial habits, and working with professionals who understand the real estate industry.
🎵 Music Credits
- “Straight A’s” by Connor Price
- “The Good Life” by Summer Kennedy
- “Be The One” by Matrika
