Hello everybody.
Thank you for coming to this week's video blog here at CA Realty Training.
My name is Robert Rico, hoping to bring you some great information that you can take on
to your brand new real estate career.
I bet you're excited.
I'm excited for you.
We're glad you did it.
You're holding that real estate license, or you will be holding it soon.
Now it's time to know a few tricks and a few things extra about the real estate career.
The first thing is this.
You got that card.
You got that real estate license.
You worked hard for it.
You pick a brokerage.
A brokerage hires you.
You're excited.
You want to hit the ground running.
You want to rock and roll.
You want to make it happen, but there's a couple of things I want you to remember.
For example, once you get your real estate license, I want you to remember one thing.
You are now what we call, for the IRS, you are now called what we call an independent
contractor.
Remember that.
That's two fold.
I want you to understand the first fold.
The first fold means that you're not going to get paid an hourly wage.
That's pretty understood when you got into the career.
You already knew that, which means you don't get hired as a realtor and the brokerage ain't
going to pay you $10 an hour, $20 an hour, $30,000 a year, $50,000 a year.
It doesn't work that way.
You're going to get paid solely on your performance.
Your performance, you'll get paid of course on your effort.
You'll only get paid on what you put into escrow.
Close escrow, and then you'll get paid.
How do you get paid?
You get paid commission.
We already know what commission is.
We discussed commission before.
You get paid your commission.
You close the deal.
"Yay!
We closed the deal.
It's time for me to get paid."
Your broker will call you in.
They'll say, "Hey, here's your check for closing that deal."
They'll hand you a check.
That check might be huge.
It might be small.
Whatever it is, that check is given directly to you.
Here it comes.
That check has no tax deductions whatsoever.
They hand you the whole thing.
There are no tax deductions on this check.
You are an independent contractor.
It is up to you to do your taxes on time and to deduct as much, as much as you want, from
these checks that you've received.
If you received $100,000 for the year of all commissions that you received throughout that
entire year, let's assume you received $100,000 total, now it's time to pay Uncle Sam his
portion.
Because you are an independent contractor, remember we said this, if you made $100,000,
now it's up to you to sit down with your tax accountant, with your bookkeeper, with your
whatever you want to call him, and start to create a game plan.
Most real estate agents have a ton of deductions.
Your advertising.
How about all of your MLS fees?
How about your real estate board fees?
How about fees for your office fees?
All these fees can be deducted and some.
How about receipts for things that you've done relating to real estate, like open house
signs that you've purchased?
There's a variety of things that your bookkeeper, tax account will advise you to use as deductions.
Bottom line is, when you're given that check by your broker, it's a great day.
"Yay!
I just made $50,000 on this one deal."
It's beautiful.
They hand you your $50,000 check.
Then you look at it and you're like, "Wow!
This is a lot of money", but what a lot of realtors do when they first get started, we
already know this, "money in hand is typically money spent", and we don't want you to do
that.
When it comes to tax season, Uncle Sam comes knocking on the door.
Uncle Sam wants his piece of the pie.
A lot of realtors when they first get started forget about that whole process, that, "Wait
a minute.
We have to pay the fiddlers.
Time to give Uncle Sam his piece."
Please remember that.
As a realtor, you are an independent contractor, which means you are working for yourself under
the brokerage.
They're going to hand you a check and say, "Here's your check.
Here's your money."
It's your job, it's your responsibility, to pay your own taxes when it's time to be paid.
That also means that, as an independent contractor, it's all up to you to make this happen.
The broker doesn't ... They might support you to make it happen, but it's not their
responsibility to make it happen for you.
You're working for yourself.
You pay your own taxes.
Nobody else is responsible for that but you.
Hope this helps you out in understanding taxes in a real estate career.
Be smart.
Put some money away when you close a deal for tax season.
Hope this helped you out when it comes to that.
Don't take the money, put it in your pocket, and run.
Don't do that.
Put some away.
Hope this helped you out.
If you have any questions or concerns, or you want us to discuss a topic that you haven't
heard yet, do us a favor.