Do Real Estate Agents Qualify for QBI?

The Qualified Business Income (QBI) deduction, introduced under the Tax Cuts and Jobs Act, allows eligible self-employed individuals and small business owners to deduct up to 20% of their qualified business income. A common question in the industry is: Do real estate agents qualify for QBI? The answer largely depends on the structure of their business and how their income is classified.

Who Qualifies for the QBI Deduction?

The QBI deduction is available to:

  • Sole proprietors

  • Partnerships

  • S corporations

  • Certain trusts and estates

Do Real Estate Agents Qualify for QBI?

Yes, many real estate agents do qualify for QBI, but it depends on how they operate their business. If you’re a real estate agent who is self-employed or operating through an LLC, S-Corp, or sole proprietorship, you may be eligible. However, there are income thresholds and service-based limitations to consider.

Important Considerations for Real Estate Agents:

  • Business Structure: Your entity type (LLC, sole proprietor, S-corp) impacts eligibility.

  • Income Thresholds: For 2025, QBI phase-out begins at $191,950 for single filers and $383,900 for joint filers.

  • Specified Service Business (SSTB): Real estate agents generally are not classified under SSTB unless services are focused on investment or legal consulting.

  • Wages and Capital: To get the full deduction above income limits, agents must pay W-2 wages or own qualified property.


How L&Y Tax Advisor Can Help

L&Y Tax Advisor specializes in helping real estate professionals maximize their deductions and comply with complex IRS rules. Our tax advisors provide:

  • Personalized tax planning

  • Business structure consultations

  • QBI deduction calculations

  • Year-round support

FAQs

Q1: Do real estate brokers qualify for QBI?
 Yes, if they are self-employed or operate under qualifying business structures.

Q2: What happens if my income exceeds the QBI threshold?
 The deduction may phase out, but certain factors like W-2 wages and capital can help retain part of the deduction.

Q3: Can employees of a brokerage claim the QBI deduction?
 No, W-2 employees are not eligible. Only independent contractors and business owners may qualify.

Q4: How can L&Y Tax Advisor assist me?
 We offer professional tax strategy services tailored to real estate agents to ensure compliance and maximize deductions.

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