Question about real estate broker commission...
10-13-2005, 08:32 PM
#1
Burning Brakes
Thread Starter
Join Date: Jan 2001
Location: New York
Posts: 947
Likes: 0
Received 0 Likes
on
0 Posts
Question about real estate broker commission...
Here in NYC, selling and buying broker makes about 3% of the selling price each. My question is that when the broker takes the 3% commission, does he/she pay income tax on it? If so how much? I mean, I guess brokers don't have a steady salary, how do they determine the tax rate?
10-13-2005, 09:23 PM
#3
I keeps it real
Join Date: Apr 2004
Location: Tempe, Arizona
Age: 45
Posts: 6,897
Likes: 0
Received 1 Like
on
1 Post
It's taxed according to whatever bracket you fall into if that check were to be replicated each month throughout the year. As in, 3k check on month one, you are taxed as if you make (3X12) 36k a year....less claim exemptions.
At the end of the year, it is reconsiled with how much you really made and the overpayment is refunded. Claiming lots of exeptions will usually nuturalize some of this tax raping.
At the end of the year, it is reconsiled with how much you really made and the overpayment is refunded. Claiming lots of exeptions will usually nuturalize some of this tax raping.
10-13-2005, 10:42 PM
#5
Safety Car
Join Date: Feb 2001
Posts: 4,052
Likes: 0
Received 0 Likes
on
0 Posts
Also, 6% commission is less common now. I've taken on listings at 5.5% as well as 5%. As prices have gone up, 5% is still pretty decent. Yes, you do have a cut with your broker and you pay tax on the remaining income at the end of the year as a self-employed individual.
10-14-2005, 08:45 AM
#6
Pro
Join Date: Jun 2003
Location: Spring Hill, FL
Age: 46
Posts: 647
Likes: 0
Received 0 Likes
on
0 Posts
Also remember that the agent is usually an independent contractor, paying full SS/payroll type taxes in addition to income taxes. On average, when I see a 2.5% gross commission, my take home pay winds up being about 1%.
10-24-2005, 11:45 PM
#7
mushroom mushroom
Join Date: Nov 2001
Location: az
Age: 44
Posts: 1,638
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by Zippee
Remeber that the 3% is split between the agent and the company they work for, the agent doesn't get the whole thing.
Inexperienced agent:
Only option: 80/20 split (min. of 2 transactions)
or
Experienced agents:
option 1: 90/10 split with no monthly fee
option 2: 100% with a monthly fee of $100
My broker also pays 100% of my E&O insurance in all cases.
As for taxes I file a miscellaneous income - 1099
The majority of commission splits in AZ are:
BB: 3% SB: 3%
Trending Topics
10-25-2005, 01:05 AM
#8
05/5AT/Navi/ABP/Quartz
Originally Posted by uu
Here in NYC, selling and buying broker makes about 3% of the selling price each. My question is that when the broker takes the 3% commission, does he/she pay income tax on it? If so how much? I mean, I guess brokers don't have a steady salary, how do they determine the tax rate?
10-25-2005, 08:29 AM
#9
Team Owner
Originally Posted by bug230
My brokerage offers several different commission rates.
Inexperienced agent:
Only option: 80/20 split (min. of 2 transactions)
or
Experienced agents:
option 1: 90/10 split with no monthly fee
option 2: 100% with a monthly fee of $100
Inexperienced agent:
Only option: 80/20 split (min. of 2 transactions)
or
Experienced agents:
option 1: 90/10 split with no monthly fee
option 2: 100% with a monthly fee of $100
Thread
Thread Starter
Forum
Replies
Last Post
