Real Estate Tax Center

Are you in the real estate business or do you own rental property or investment property? If so, this information is for you. It is important for you to know your tax responsibilities.
 
 

Tax Tips for Real Estate Agents

 
What is Taxable and Nontaxable Income?  You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable.  
 
Recordkeeping Unless you are a professional bookkeeper, you probably don't like to spend valuable business time keeping records. But keeping good records can actually help you save money.
 
Business Expenses  Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit.
 
Employees or contract labor (self-employed)  It is critical that you, the employer, correctly determine whether the individuals providing services are employees or independent contractors.
 
Deducting Travel, Entertainment and Gift Expenses There are specific guidelines to be followed when deducting travel, entertainment and gift expenses. 
 
Filing Late and/or Paying Late: Information You Should Know Before you decide not to file your tax return on time or not pay all of your taxes when they are due, consider this.
 
Reporting Information Returns Your business may be required to file information returns to report certain types of payments made during the year.
 
Self-Employment Taxes The self-employment tax is a social security and Medicare tax for individuals who work for themselves.
 
Estimated Tax Payments  Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards.  
 
Understanding Your IRS Notice We realize that receiving a notice from the IRS can be unnerving, but if you follow these simple steps, the process for resolving the discrepancy should be straightforward.
 
Real Estate Industry Fact Sheet by Criminal Investigation
Through federal tax fraud investigations and money laundering charges, the Internal Revenue Service is playing a key role in the fight against real estate fraud.

 

Useful Forms and Publications

Publication 535Business Expenses
Form SS-8 (PDF) Determination of Worker Status for Purposes of Federal
Employment Taxes and Income Tax Withholding
Publication 15-A (PDF) The Employer's Supplemental Tax Guide has detailed guidance including information for specific industries.
Publication 15-B The Employer’s Tax Guide to Fringe Benefits supplements Circular E (Pub. 15), Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide. It contains specialized and detailed information on the employment tax treatment of fringe benefits.
Publication 463, Travel, Entertainment, Gift, and Car Expenses
2007 Form 1040 (Schedule C) (PDF) Profit or Loss from Business
2007 Form 1040 (Schedule SE) (PDF) Self-Employment Tax
Form 1040-ES (PDF) Estimated Tax for Individuals
 
Tax Tips for Landlords/Rental Owners/Investors
This section contains information on topics such as tax credits, rental income and expenses, and the sale of property.
 
 
Rental Income and Expenses - Real Estate Tax Tips When are you required to report rental income and expenses?
 
Passive Activity Losses - Real Estate Tax Tips Your losses may not be currently deductible.
 
Frequently Asked Questions – Rental Property Learn the answers to such questions as depreciation, deductible expenses, and selling your property.
 
Tax Topic 414 – Rental Income and Expenses This article addresses the various income and expenses associated with a rental property.

Audit Technique Guides - Real Estate The IRS Market Segment Specialization Program (MSSP) publishes various guides for use by IRS employees conducting audits and as information for taxpayers and practitioners.

Selling Your Property  When you sell a capital asset, the difference between the amounts you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss.
  
Like-Kind Exchanges - Real Estate Tax Tips Can you defer your gain under Internal Revenue Code Section 1031?
Sale of Residence - Real Estate Tax Tips Do you qualify to exclude your gain?
 
Installment Sales - Real Estate Tax Tips Time is on your side. An installment sale is a sale of property where you receive at least one payment after the tax year of the sale.
 
Involuntary Conversions - Real Estate Tax Tips Destroyed, stolen, or condemned property?

Environmental Cleanup Costs  This deduction provides businesses with an incentive to clean up certain sites that are contaminated with hazardous substances. Refer to the section on Environmental Cleanup Costs in Publication 535, Business Expenses.

Rehabilitation Tax Credit - Real Estate Tax Tips Taking credit for history. The rehabilitation credit applies to costs you incur for rehabilitation and reconstruction of certain buildings.

Commercial Property Owners and Leaseholders Qualify for Energy Efficiency Tax Deduction New section 179D allows a deduction to a taxpayer who owns, or is a lessee of, a commercial building and installs property that satisfies energy efficiency requirement
 
Publication 527 Residential Rental Property
Schedule E Rental Income and Expenses (PDF)
Publication 946 How to Depreciate Property
Form 4562 Depreciation (PDF)
Pub 925 Passive Activities
Form 8582 (PDF) Passive Activity Loss Limitations
Form 1040 Schedule D (PDF) Capital Gains and Losses
Form 4797 (PDF) Sales of Business Property
 
General Real Estate Information
Whether you are a landlord, investor, or real estate agent, there is additional information you need to be aware of:
 
FIRPTA  The Foreign Investment in Real Property Tax Act (FIRPTA) requires a FIRPTA withholding tax of 10% of the amount realized on the disposition of all U.S. real property interests by a foreign person. A buyer of U.S. real property interest from a foreign investor is considered the (transferee) and also the withholding agent. The transferee must find out if the transferor is a foreign person. If the transferor is a foreign person and the transferee fails to withhold, the buyer may be held liable for the tax. The seller must report that sale of the real property interests by filing a U.S. Federal Tax Form 1040-NR or Form 1120-F.
 
 
Form 8300Workbook on Reporting Cash Payments of over $10,000   The law requires that trades and businesses report cash payments of more than $10,000 to the federal government by filing IRS/FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. This workbook helps determine what transactions a business must report and how to report them and also addresses the civil and criminal penalties that might apply for noncompliance with the rules.
 
Foreclosures/Short Sales
·         Questions and Answers
·         Cancelled Debt  
If your home is foreclosed or part of a debt is forgiven, you may have to include some or all of it in your income. 
Tax Gap information for real estate industry
·         Other tax gap fact sheets 
 
Trends and Statistics - Real Estate This site provides industry specific and general survey results that should be of interest to the small business owner.

Related Links - Real Estate This page provides you links to sites that have specific information dealing with real estate.

Financial Resources - Real Estate This section provides you with direct links to many commonly used financial resources for small businesses.

Income Verification Express Service (IVES) Close loan transactions much more quickly using our IVES system. Transcripts can now be delivered, electronically, through e-Services.
General Information for Businesses
Tax Information for all Small Businesses This section provides general small business information useful in all industries and professions. It includes links to small business products, employment taxes, electronic filing and paying, taxpayer burden reduction, abusive tax avoidance transactions, and many other topics.
 
Worker Classification (Independent Contractors vs. Employees) Are you or your help independent consultants or employees? Before you can know how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services.
 
Small Business Videos These videos are designed to help new and existing small business owners understand and meet their federal tax obligations. Topics include: What you need to know about federal taxes and your new business, how to set up and run your business so paying taxes isn't a hassle, federal unemployment taxes, and much more.
 
The Small Business Resource Guide CD-ROM
The Small Business Resource Guide (SBRG) CD-ROM is a handy, interactive CD designed to equip small business owners with the skills and knowledge needed to successfully manage a business. The CD covers a wide range of topics, from starting a business to retirement plan options. Accessible on-line 24 hours a day.
 
Small Business Products Online Ordering
Looking for a tool to help you meet your tax requirements? Choose from our free products, developed especially for the Small Business/Self-Employed person, and obtain updated information on existing products. Order today online or by calling (800) 829-3676.
 
The Tax Calendar for Small Businesses and Self-Employed (Publication 1518)
The Tax Calendar for Small Businesses and Self-Employed is filled with useful information on general business taxes, IRS and SSA customer assistance, electronic filing and paying options, retirement plans, business publications and forms, common tax filing dates, and Federal legal holidays.
 
e-News for Small Businesses is a free electronic mail service designed to provide tax information for small business owners and self-employed individuals. It is distributed every other Wednesday.
 
Remember that for the genuine IRS Web site be sure to use .gov.  Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.