Tax Withholdings For Realtors? | ADHI Schools



Tax withholdings for Realtors?

Published by Kartik Subramaniam

On December 09,2009 | Reading Time : 2 minutes


One of the nice things about being in real estate is we are generally treated as independent contractors for tax purposes and work hour requirements.

Legally, of course, the California Bureau of Real Estate always treats us as employees of the broker. From 30,000 feet this means that the broker must reasonably supervise any salespeople working for the broker and the broker is generally responsible for a wrong done by the salesperson while the salesperson is acting under the scope and course of employment.

However, for tax purposes and work hour requirements - what I am attempting to talk about in this article - salespersons can be treated as independent contractors not employees. This generally means:

1. Salespersons are independently licensed.
2. Compensation is based on sales made, not hours worked.
3. There is a written contract that states that the salesperson will be treated as an employee for tax purposes.

Recently, due to the California budget crisis, there was a proposal to have real estate brokers withhold 3% from commissions paid to salespeople.

Yesterday, we got word from CAR that this is not going to be the case.

Real estate agents that are taxed as independent contractors get to keep all the commissions due them and the brokers are not required to withhold this 3%!

The world is once again in balance!

PS: Check out our YouTube video of this here

Enjoy what you read?

Sign up for our newsletter and get weekly updates on our latest articles

Practical advice for real estate agents

Top Qualities of a Successful Real Estate Agent: Breaking Things Down

In a lot of ways, the real estate industry is unique in that there are so many moving parts

Read more...

Practical advice for real estate agents

How to Negotiate a Higher Commission Split as a Real Estate Agent

While this topic might be a little more advanced, especially if you are just starting real estate school online,

Read more...

Practical advice for real estate agents

Increasing Your Confidence as a Real Estate Professional: Your Guide

If you had to make a list of some of the most important traits that any successful real estate

Read more...