Real Estate

Forum|Forum|3 years ago
November 16, 2022
2 replies
5 views

If a real estate agent wants to give part of their commission back to a client, can they do that and reduce their tax load? Can it be a reduction in tax, or does it have to be a regular deduction, or a business expense?

mbpeddie

Employee Tax Expert

If a Real Estate agent wants to give part of their commission back to a client, this would be considered a rebate and would be a deduction as long as the entire commission amount was included in your year end 1099- NEC.

Then the rebate amount would be included as a business expense on your Schedule C.

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LWEMEAuthor

Level 3

I have seen that there is a real estate form an agent can fill out before a "closing" that apparently allows them to declare what they are going to give back to a client. It sounds like this way you avoid paying taxes on what you give back. If you wait and give it after the closing, is it the same tax advantage if you declare it as a business expense?

Thank you so much. This post is after the time, so maybe I won't get a response, but the day of questions was very appreciated. How often does this happen?