Solved: Real estate agent, 1099, and rebate
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n_yarter
New Member

Real estate agent, 1099, and rebate

If I wanted to rebate part of my commission as a real estate agent after closing, is that still income on my end? If it is, will the rebate be a deduction? Is it a dollar per dollar deduction or a percent. Also, what if I rebate my commission at closing to help with closing costs? Will that be considered income on my end?
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Accepted Solutions
NancyG
New Member

Real estate agent, 1099, and rebate

You can take a deduction for any rebate you give, if the rebate is included in your income. For example, you are given a 1099-Misc for the entire commission. However, to help with closing you have given a rebate to help with closing costs.  Since you are reporting all the commission, you should also report the rebate expense you incurred to make the commission. Remember to keep back-up paperwork to support the rebate deduction.

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6 Replies
NancyG
New Member

Real estate agent, 1099, and rebate

You can take a deduction for any rebate you give, if the rebate is included in your income. For example, you are given a 1099-Misc for the entire commission. However, to help with closing you have given a rebate to help with closing costs.  Since you are reporting all the commission, you should also report the rebate expense you incurred to make the commission. Remember to keep back-up paperwork to support the rebate deduction.

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Nikol1987
Level 1

Real estate agent, 1099, and rebate

What if a real estate agent helps sells her parents home and rebates 100% of the commission to her parents. Tax deductible? 

TomD8
Level 15

Real estate agent, 1099, and rebate

@Nikol1987 -- Same answer as given last year by @NancyG .  If the entire commission amount is included in your own year-end 1099-MISC, then you may deduct the rebated amount as a business expense on your Schedule C.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

Critter-3
Level 15

Real estate agent, 1099, and rebate

I would question why they are paying any of your commission at closing ... can you not waive the fee in your state ?   Or is the broker you work for have a problem with that arrangement?  

Nikol1987
Level 1

Real estate agent, 1099, and rebate

It’s actually a client of mine. 

Taxpayer who has a real estate license (but is not practicing real estate) earned $13k commission for the sale of the parents house (received 1099 for it) but she gave the credit back to her parents. Can this be deducted as business expense (rebate) or because it’s a family it’s considered to be a gift (not deductible expense)?

Critter-3
Level 15

Real estate agent, 1099, and rebate

Practicing or not she must report the income on a Sch C at least then take a deduction for the payout to her parents to negate the income. To the parents is it a reduction in the purchase price so they should reduce the basis by that amount ... it is not a gift or income to them.

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