Real Estate

Commission income, rental property tracking, and trust account management for real estate professionals and investors.

The Industry

Real estate agents close deals in uneven patterns. Three sales in April generate $42,000 in commission. May brings one small deal for $8,500. June has nothing. Quarterly taxes need to account for this lumpiness but most agents just guess. Brokers managing a team of agents deal with splits, expenses allocated across multiple transactions, and 1099 filings for independent contractor agents who may or may not actually qualify as contractors under IRS rules.

Property managers hold tenant security deposits in trust accounts that can’t mix with operating funds. Rental property investors need profit and loss by property to know which buildings make money and which drain cash on maintenance. Short-term rental operators have nightly rates, cleaning fees, platform commissions, and occupancy tracking that traditional rental accounting doesn’t handle. Each segment of real estate has specific accounting requirements that general bookkeeping misses.

Who This Covers

Real estate agents and brokers, property management companies, rental property investors, short-term rental operators. Any real estate business in Phoenix dealing with commission income, rental properties, or trust account requirements.

Industry Specifics

Commission income timing and quarterly estimates. Agent classification as employees versus contractors. Trust account compliance for property managers. Rental property tracking with separate P&Ls per building. Short-term rental platform reconciliation. Depreciation schedules on investment properties. Repairs versus improvements capitalization. Property tax and mortgage interest allocation.

What We Handle

Commission-based agents need quarterly estimated taxes calculated on irregular income. We track your closings, set aside appropriate amounts for taxes, and adjust estimates each quarter so April doesn’t bring a bill you weren’t expecting. Brokerages with agent teams need proper worker classification - are your agents employees or contractors? Get it wrong and the IRS comes looking for back payroll taxes. We handle 1099 preparation and filing for agents classified as contractors.

Property managers need trust account separation and reconciliation. Tenant deposits can’t mix with operating funds. We set up proper trust accounting in QuickBooks and reconcile monthly to maintain compliance. Rental property investors get profit and loss statements by property showing which buildings are profitable after mortgage, taxes, insurance, maintenance, and vacancy. Tax preparation captures depreciation, mortgage interest deductions, and the distinction between repairs you expense immediately versus improvements you capitalize. Short-term rentals need platform fee reconciliation with Airbnb and VRBO, occupancy tracking, and proper handling of cleaning fees.

Commission Income and Agent Management

Quarterly estimated taxes for commission-based income that arrives irregularly. Proper agent classification and 1099 filing for contractor agents. Expense tracking and allocation for brokers managing teams. Tax preparation that maximizes deductions for vehicle use, home office, continuing education, and marketing costs specific to real estate professionals.

Property-Level Accounting and Compliance

Separate P&L by rental property showing true profitability after all costs. Trust account setup and monthly reconciliation for property managers. Short-term rental platform reconciliation and occupancy tracking. Tax strategy around depreciation schedules, 1031 exchanges, and repair versus improvement capitalization decisions.

What Goes Wrong

Agents who don’t set aside money for quarterly taxes spend commission checks as they arrive. Then April comes and they owe $18,000 with no cash saved. Or they overpay quarterly estimates based on one good month and struggle with cash flow the rest of the year. Brokers treating contractor agents as employees create unnecessary payroll tax obligations. Treating employees as contractors to avoid payroll taxes creates IRS problems when the classification gets challenged.

Property managers who commingle tenant deposits with operating funds violate trust account rules and create compliance exposure. Rental property investors who lump all properties together can’t tell which buildings are profitable. One property might generate solid cash flow while another loses money on maintenance, but combined financials hide this. Short-term rental operators who don’t reconcile platform fees discover months later that Airbnb’s numbers don’t match their books and can’t figure out why. Depreciation gets missed or calculated wrong, leaving tax deductions on the table.

Tax Surprises and Misclassification

No quarterly estimates or wrong amounts leading to surprise tax bills. Agent misclassification creating IRS exposure for back payroll taxes. Deductions missed because nobody’s tracking vehicle mileage, home office square footage, or business meal expenses throughout the year.

Property Tracking and Compliance Issues

All rental properties combined into one P&L hiding which are profitable and which aren’t. Trust accounts not separated properly creating compliance violations. Short-term rental income not reconciled to platform statements. Repairs expensed that should have been capitalized or improvements depreciated wrong.

What Changes

Quarterly estimates get set based on actual commission income each quarter, not guesses. You know what to set aside and what you can spend. Agents classified correctly from the start avoiding IRS scrutiny. 1099s filed accurately for contractor agents. Tax returns capture every deduction real estate professionals are entitled to - vehicle expenses, home office, continuing education, marketing costs, professional dues.

Each rental property shows its own profit and loss. You can see which buildings make money and which need rent increases or sell decisions. Trust accounts maintained properly for property managers with monthly reconciliation. Short-term rentals reconciled to platform statements so you know your actual income after fees. Depreciation calculated correctly. Repairs versus improvements handled properly. Tax strategy around 1031 exchanges and timing of property sales to minimize tax impact.

Predictable Tax Obligations

Quarterly estimates that adjust with commission income. No April surprises. Maximum deductions captured throughout the year. Agent classifications that stand up to IRS scrutiny. Tax planning around commission timing and business structure optimization.

Property-Level Intelligence

Know which rental properties are profitable and which aren’t. Trust account compliance for property managers. Short-term rental income reconciled accurately to platforms. Depreciation and tax strategy maximizing returns on investment properties. Financial data that supports smart acquisition and disposition decisions.

The Valley's Trusted Accounting Firm