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New Member
posted Jun 3, 2019 1:53:58 PM

New NJ real estate agent with no commissions but expenses equaling $4k (MLS, monthly dues etc.) Do I take the standard deduction only because it's more than 4k? both?

Everyone is telling me that I can only take the standard deduction because it's more than the $4,000 in real estate expenses I have for 2018. Someone else told me it's different and can do both because real estate is a small business. I am married and have a full time job as well.

TY

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1 Best answer
Level 15
Jun 3, 2019 1:54:03 PM

That "someone else" is correct.  Even though you haven't had any income yet from your real estate business, you can legitimately deduct your allowable business expenses on Schedule C.  You'll need to upgrade to the Home & Business version of TurboTax, then enter the expenses as business expenses.

Unless you're on salary, you're going to be considered a self-employed business for tax purposes - and you'll be reporting your real estate income and expenses on Schedule C, which will be part of your normal tax return.  You will still be able to itemize or take your standard deduction, which is what "someone else" was telling you. 

Schedule C expenses are deductible even if you have no income, as long as your real estate activities are a business and not a hobby.  If you're paying MLS fees and monthly dues, and you're associated with a local brokerage, you're legitimately a business. 

Something important to be aware of:  once you start making money as a realtor, you may well have to start paying quarterly estimated taxes.  That's because (again assuming you're not on salary) no taxes are going to be withheld from your pay.  

4 Replies
Level 15
Jun 3, 2019 1:53:59 PM

how are you going to show prospective buyers a home if you have a full time job elsewhere?

New Member
Jun 3, 2019 1:54:00 PM

Hello, I am dual career. Almost 75% of my brokerage is “part-time” also. I conduct my business after 4:30 weekdays and work on the weekends. Currently, my buyers and sellers have full time jobs as well and are only available those times anyway.

Level 15
Jun 3, 2019 1:54:01 PM

you go girl!

Level 15
Jun 3, 2019 1:54:03 PM

That "someone else" is correct.  Even though you haven't had any income yet from your real estate business, you can legitimately deduct your allowable business expenses on Schedule C.  You'll need to upgrade to the Home & Business version of TurboTax, then enter the expenses as business expenses.

Unless you're on salary, you're going to be considered a self-employed business for tax purposes - and you'll be reporting your real estate income and expenses on Schedule C, which will be part of your normal tax return.  You will still be able to itemize or take your standard deduction, which is what "someone else" was telling you. 

Schedule C expenses are deductible even if you have no income, as long as your real estate activities are a business and not a hobby.  If you're paying MLS fees and monthly dues, and you're associated with a local brokerage, you're legitimately a business. 

Something important to be aware of:  once you start making money as a realtor, you may well have to start paying quarterly estimated taxes.  That's because (again assuming you're not on salary) no taxes are going to be withheld from your pay.