Tax Planning Moves Every Agent Should Make Before December 31st
Introduction
Most real estate agents think about taxes once a year — in March or April when it’s time to file. By then, it’s too late.
The reality is: the biggest tax savings happen before December 31st, not after.
Smart agents treat year-end like their Super Bowl. They make moves in November and December that can cut thousands off their IRS bill, while also setting themselves up for a stronger financial year ahead.
This guide breaks down the most important tax planning moves every real estate agent should make before December 31st.
1. Review Your Year-to-Date Income and Expenses
Before you can plan, you need to know where you stand.
Run a Profit & Loss Statement (P&L): Use a software like QuickBooks Online.
Compare to Last Year: Are you ahead, behind, or about the same?
Estimate Taxes Owed: Factor in both income and self-employment tax (15.3%).
2. Prepay Deductible Expenses
If you expect higher income this year than next, accelerate deductions now.
Marketing costs (postcards, online ads, staging, photography)
MLS dues or licensing fees for next year
Office rent or coworking space
Insurance premiums
Continuing education courses
💡 Pro Tip: You must actually pay before Dec 31 (credit card counts). Writing checks Jan 1 won’t help.
3. Maximize Retirement Contributions
Retirement plans = double benefit (tax savings + wealth building).
Options for Agents:
SEP IRA: Up to 25% of net income (max $70,000 in 2025).
Solo 401k: Up to $23,000 employee deferral + 25% employer contribution (max $70,000 in 2025).
Roth IRA: {$7,000 ($8,000 if 50+) 2025 amounts}, no deduction now but tax-free later.
4. Time Your Closings Strategically
Closings near year-end can shift taxable income between years.
Push a Closing Into January: If income is high this year and you expect a slower start next year.
Pull a Closing Into December: If you’re having a down year and want to use more deductions.
5. Invest in Equipment or Upgrades
The IRS allows you to deduct business equipment and improvements.
Computers, cameras, video gear
Office furniture
Vehicles (if >50% business use, may qualify for Section 179 or bonus depreciation)
💡 Example: Buy a $2,000 laptop in December → full deduction this year instead of spreading over 5 years.
6. Review Vehicle Deductions
Two methods:
Standard mileage (70¢ per mile in 2025)
Actual expense method (gas, repairs, insurance, depreciation)
💡 Pro Tip: If you’re considering buying a new car, year-end may be the perfect time for Section 179 expensing — but check with a CPA to avoid audit risk.
7. Pay Outstanding Invoices & Expenses
If you owe vendors (photographers, stagers, VAs), paying them before Dec 31 locks in the deduction this year.
💡 Pro Tip: Even reimbursing yourself for out-of-pocket expenses before year-end makes them deductible.
8. Check Your Estimated Taxes
If you’ve underpaid quarterly taxes, make an extra payment by Jan 15 to avoid penalties.
9. Charitable Contributions
Giving back feels good and cuts your tax bill.
Donate cash, stocks, or property to qualified charities.
Deduction only applies if you itemize.
Keep receipts and acknowledgment letters.
💡 Pro Tip: Donating appreciated stock avoids capital gains tax and creates a charitable deduction.
10. Clean Up Your Books
A messy year-end = missed deductions.
Categorize uncategorized expenses.
Reconcile bank and credit card accounts.
Save receipts and mileage logs digitally.
💡 Pro Tip: Create a “Tax Binder” (digital folder) with P&L, receipts, mileage, and invoices ready for your CPA.
11. Evaluate Your Entity Structure
If you’re netting >$60–80k, an S-Corp election may save thousands in self-employment tax.
Salary + distributions split = reduced SE tax.
Must run payroll properly.
💡 Pro Tip: Election must be filed timely — but year-end is the perfect time to review whether an S-Corp makes sense going forward.
12. Schedule a Year-End CPA Meeting
The most valuable move isn’t DIY — it’s expert planning.
Review P&L + tax projections.
Decide which expenses to prepay or defer.
Maximize retirement + health deductions.
Avoid IRS red flags.
Conclusion
The difference between paying too much in taxes and keeping more of your commissions often comes down to what you do before December 31st. Check out the Real Estate Agent Tax Strategy Guide for more helpful information.
Here’s your checklist:
✅ Review income + expenses
✅ Prepay deductible expenses
✅ Max out retirement accounts
✅ Time closings strategically
✅ Invest in equipment
✅ Pay outstanding bills
✅ Check estimated taxes
✅ Make charitable contributions
✅ Clean up books
✅ Meet with a CPA
👉 Don’t wait until April. Make these moves before December 31st and start the new year with confidence — and more money in your pocket.
