Writing off real estate commission on your own deal?

4 Replies

Hi all -

Tax question.  If you are a licensed real estate agent and end up selling your own property, do you still get to write-off the real estate commission against your profit/loss on the sale?  

The commission you charge yourself is one of your costs as selling as a consumer. Conversly your commission received as an agent is earned income as well.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

Yeah but that commission will show back up on the 1099 you get from your broker at the end of the year.

@Michael Elfant

If that's too complicated, why just not take a commission on the sale of your own house. That way no expense or income. 

If not, the 1099s is income, and commission your selling expense that reduces your gain on sale, if any. 

If there is no gain recognization because of 121 exclusion, there is no benefit of paying yourself a commission because you do not use commission deduction against your gain but you get taxed on it (again).   

Also, you are paying ordinary tax on commission income (1099 ) but saving capital gain tax on the commission expense. So, another disadvantage. 

@Michael Elfant

I agree with Ashish here. You may want to avoid paying yourself the commission(if possible).

1) If you pay yourself a commission - your gain on the sale will be less. This gain, maybe taxed at favorable capital gains tax rates.
Furthermore - you will be required to report the commission on your schedule C which may be subject to ordinary income tax rates + self employment tax.

Basit Siddiqi, CPA

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