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As a real estate professional, maximizing profits while minimizing tax liabilities is crucial for long-term success. Whether you're a solo realtor or managing a brokerage, implementing smart tax strategies and business growth tactics from our team at Whittmarsh can help you scale efficiently. Here are six powerful hacks to help you save on taxes and accelerate growth.
The QBI deduction allows eligible self-employed realtors and brokers to deduct up to 20% of their qualified business income. To maximize this benefit, consider structuring your business as an S Corporation or LLC, depending on your income level and expenses. Consult a tax professional to determine the best setup for your specific situation.
Many realtors miss out on valuable deductions that can lower their taxable income. Be sure to track and claim expenses such as:
Setting up a SEP IRA, Solo 401(k), or SIMPLE IRA allows you to defer income taxes while building wealth for the future. Contributions to these accounts are tax-deductible, reducing your taxable income. A Solo 401(k) also provides the added benefit of allowing higher contribution limits, making it an excellent option for high-earning brokers.
Growing your business requires consistency in client outreach and lead generation. Use tools like CRM software, emails, social media posts, and customer reviews to promote engagement.
Check out how Moderno Construction Management, Arc Properties, and The Duplex Doctors do this really well.
This ensures you're always top-of-mind for potential buyers and sellers while freeing up time for revenue-generating activities.
Realtors and brokers deeply understand real estate markets, making them well-positioned to invest in rental properties or fix-and-flip opportunities. This can generate additional income and provide tax advantages, such as depreciation deductions and 1031 exchanges, which allow you to defer capital gains taxes when reinvesting profits into another property.
You may be overpaying on taxes if you're still operating as a sole proprietor. Consider forming an LLC or S Corporation to take advantage of pass-through taxation and self-employment tax savings. An S Corp, for example, allows you to pay yourself a reasonable salary while taking additional income as distributions, which are taxed at a lower rate.
Realtors and real estate brokers can increase profitability and achieve long-term success by implementing these tax and growth hacks. Always consult with our tax professionals to ensure you're making the best strategic moves for your business. Ready to take your real estate career to the next level? Start optimizing your finances and scaling your operations today! Contact our experts at Whittmarsh.