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Joni Baldwin

Joni Baldwin
Worldwide, REALTORS®
Keller, TX 76248

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Real Estate News

Latest Realty News from NAR

The Art of Follow Up: Effective Follow-up Communication Techniques

Strategic outreach, whether by phone, email or text, is key to building rapport and credibility with prospects, staying top of mind in the search for a home, and encouraging clients to follow through with the sale. But outreach, by itself, doesn’t close deals.

If you’re contacting leads regularly, but still having trouble reaching your sales goals, you may be using the wrong outreach methods for the wrong types of communication.

Find ideas for improving your outreach metods in a new guide, The Art of Follow Up: Effective Follow-up Communication Techniques.

Great for team leads looking to improve their coaching skills and agents looking to communicate more effectively, this guide provides a deep dive into the different outreach methods, when to use them, best practices and effective sample templates.

Editor’s note: This is a sponsored post from Firepoint Solutions, a company that offers a customer relationship management (CRM) tool for real estate professionals.

How to Factor 20% Deduction Into Your 2018 Estimated Quarterly Payments

The big win for real estate in last year’s tax reform law is the new 20 percent business income deduction. You take it on your net pass-through income. Pass-through income is what most real estate professionals earn. If you’re an independent contractor or if you’ve structured yourself as a sole proprietor, your income is considered pass-through because you calculate your taxes on the individual, rather than the business, side of your tax filing.

Being able to take 20 percent off your income is potentially a big money saver for you and 2018 is the first year you can apply it. That means for the last three quarters, you have had the opportunity to calculate your deduction as part of your estimated payments.

As with any new tax provision, there are questions about applying that deduction in your estimated taxes, and the IRS hasn’t issued final rules yet. But there are a few things you can do.

First, you want to make sure your accountant is aware of the deduction. Second, you can take the safe-harbor approach and calculate your estimated quarterly payments based on what your income was last year. If you do that, even if you’ve underestimated your taxes come April of 2019, when you have to settle up your payments, you won’t get penalized or have interest payments imposed on you. Third, you can choose to calculate your actual payment rather than use last year as a guide. The risk here, though, if you end up underpaying, is you could face a penalty and interest payments. (Although you might be eligible for a penalty waiver depending on your tax-filing history.)

Whatever you do, make sure you have a professional accountant or tax attorney guide you. The IRS is expected to release its final rules before the end of the year. When it does, it will likely release new or modified forms to help you calculate the new deduction.

There are other potentially favorable provisions in the new tax law, starting with the reduction in tax rates. All of the brackets are lower now, so at a minimum, you face lower tax rates on your income. On the negative side, the deduction for business entertainment costs is gone and there’s ambiguity in deducting business meal costs when those costs are wrapped up in your entertainment expenses. The IRS should have guidance on that soon.

On the 20 percent business income deduction, there’s common-sense advice in a new Q&A published by REALTOR® Magazine. It’s based on a conversation with Peter Baker, a veteran CPA whose practice specializes in helping real estate agents and brokers. You can access that Q&A here.

The latest Voice for Real Estate news video from NAR also tackles the 20-percent deduction issue. Watch that segment here.

Clarity on Deductibility of Meal Expenses May Be Coming

You may have seen a report today in The Wall Street Journal (subscription and login required) stating that the Internal Revenue Service is working on guidance that would clarify the deductibility of expenses for client meals under the new tax law. According to the report, this guidance is expected to say that the cost of business meals will be 50 percent deductible. That could include expenses for food purchased at events defined as entertainment, such as ballgames, as long as the cost of the food is documented separately, the report says.

The tax law passed last December made clear that the cost of the entertainment itself, which formerly was 50 percent deductible, is no longer deductible as a business expense, but left open the question of whether meals for clients, even at events that are primarily business-related, would still be partially deductible.

This rule clarification is of particular interest to real estate professionals, because many provide food at open houses or receptions for clients and prospective clients. “Unfortunately, this falls under a gray area, and we will not know for sure until the IRS issues guidance,” says Evan Liddiard, a CPA and NAR’s senior policy representative for federal taxation.

Linda de Marlor, president of Tax-Masters Inc., an accounting firm in Rockville, Md., that helps real estate professionals manage their taxes, says she believes that the cost of food served at an event intended specifically to provide information to clients will be deductible under the new tax law. “If I hold a seminar and I serve food at the seminar for the people who come, then that’s education, and I can deduct it,” de Marlor says.

Also, note that even if the IRS settles the question of whether business meals are still partially deductible, you’ll still need to ensure that these expenses are reasonable. Claiming a deduction for food expenses that are considered excessively high could cause the cost of the food to be deemed entertainment instead of a meal expense—and the deduction to be disallowed as a result.

As with any tax-related matter, real estate professionals should speak with a qualified tax advisor before making any decisions regarding the deductibility of meal expenses. NAR will continue to advocate for members as the government implements the new tax law, and will provide further information about this topic following any guidance issued by the IRS.

Joni Baldwin | 817-602-1194 | Contact Me
1727 Keller Parkway - Keller, TX 76248
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