You show houses. You don't track mileage logs at midnight. We elect the S-Corp, deduct the right portion of the vehicle, design a Solo 401(k), and stop letting missed broker 1099s become an audit flag.
Realtors are not Specified Service Trades under §199A, so the full 20% QBI deduction is available regardless of income. But most agents stay on a Schedule C past $200K of GCI, pay 15.3% self-employment tax on every dollar, and never see the S-Corp savings their top-producing peers use.
You drive 25,000+ business miles a year showing properties, attending closings, and inspections. We compare standard mileage (67¢ per mile for 2024) against actual expense plus depreciation including §179 on a heavy SUV over 6,000 lbs GVWR. We pick the method that wins and lock in the documentation.
IRC §162(a); §179(b)(5) SUV cap; Rev. Proc. 2019-46Above $200K of net commission income, the S-Corp election typically saves $10K to $25K per year in self-employment tax. We benchmark reasonable comp against NAR producer surveys and BLS data, file the late S election if you missed March 15, and run payroll through Gusto so the wage is bulletproof.
IRC §1362; §1402(a); Rev. Proc. 2013-30 (late election)Real estate brokerage is not an SSTB. You get the full 20% QBI deduction even above the $383,900 MFJ threshold for 2024, as long as you have enough W-2 wages or qualified property. The S-Corp structure feeds the W-2 wage limit and unlocks the deduction at higher incomes.
IRC §199A(b)(2)(B); §199A(d); Treas. Reg. §1.199A-5A solo agent under 50 can shelter up to $69,000 in 2024 between employee deferrals and employer profit sharing on the S-Corp wage. Over 50, add the $7,500 catch-up. Roth solo 401(k) is available. We design the plan, file the 5500-EZ once assets cross $250K.
IRC §401(a), §401(k), §415(c); Notice 2023-75MLS dues, lockbox fees, Zillow Premier and Realtor.com leads, professional photography, drone footage, staging consultations, yard signs, closing gifts (subject to $25 per recipient limit), CRM and transaction management software all deduct on Schedule C or as S-Corp business expenses. We make sure none of it gets capitalized in error.
IRC §162(a); §274(b)(1) gift limit; §263 capitalization rulesMost agents have a real home office that meets §280A(c) regular-and-exclusive use. Skipping it costs $2K to $4K a year. We also reconcile every 1099-MISC your broker filed against your gross commission so the IRS matching program doesn't flag an underreporting notice 18 months later.
IRC §280A(c)(1); §6041; §6721 penaltiesTop-producer realtor, age 41, $480K GCI, was on a Schedule C with a CPA who never proposed the S-Corp. We elected late S-Corp, set reasonable comp at $145K, built a Solo 401(k), and ran the heavy SUV under §179.
$32,000 savedFederal SE tax + income tax savings on the S-Corp distribution split, $69K Solo 401(k) contribution at marginal rate, and §179 vehicle deduction. State savings on top. Tax-deferred retirement growth compounding for 25 years.