Real Estate

As a real estate agent, you can control your own success—but you can’t control your local market. The state you live in will impact your income and overall success. To help you understand the different challenges you’ll face in each state, we evaluated things like cost of living and earning potential in all 50 states. Click here for a complete summary of the data we considered as part of this study. Top 10 States to Be a Real Estate Agent 1. Wyoming Wyoming ranked No. 1 on our list due to being in the top 10 for four out of the five factors: agent competition, agent salary, homeownership, and cost of living. This state boasts an annual median wage of $71,460 and 71.9% of owner-occupied homes in the state. In addition, the overall cost of living in the state is the 10th lowest of all the states. Although Wyoming didn’t perform well for median home value (23rd on the list), there are fewer agents in Wyoming than in many states, ranking it eighth on our list for agent competition. Plus, Wyoming has some of the lowest taxes in the country and has a large volume of undeveloped land, making it attractive for homebuyers who want to build a home on acreage. 2. Michigan Michigan ranks high on our list of the best states to be a real estate agent because of low agent competition (fourth on our list) and a high percentage of owner-occupied homes (71.6%, making it fifth on our list). The state also boasts an extremely low overall cost of living—seventh on our list. Despite ranking highly for several criteria, the overall median home value in Michigan is low compared to other states at $154,900 (41st), which has decreased in the last two years. Agent salaries are also lower than in other parts of the country, with annual median salaries around $57,170 (23rd on our list). However, the low cost of living makes up for this, allowing Michigan to rank No. 2 on our list; it’s a great option for new agents who want to keep expenses low while building their business. 3. West Virginia At third on our list, West Virginia is a great option for real estate agents primarily because of the high percentage of owner-occupied homes (73.4%, which is the highest percentage of all states). Agents in the state also face less competition than agents in other states (11th overall). However, West Virginia is ranked 50th out of 51 states for home value, with a median of $119,000. This impacts the median agent salary, which has decreased to $56,880 per year. West Virginia’s appeal for agents is rounded out by the overall cost of living in the state (17th overall). Plus, while not a criterion considered in our rankings, West Virginia also shares license reciprocity with 12 states and Puerto Rico. This makes the state a great option for agents who want to sell real estate in multiple states ranging from Georgia, to Alabama, to Massachusetts. 4. Vermont Vermont offers an excellent environment for real estate agents primarily because of a low rate of agent competition—first on our list. The state also boasts a relatively high percentage of owner-occupied homes (70.9% and 8th on our list), so there is notable opportunity to become a successful buyer or seller agent. Vermont also ranks slightly above average for median home value (20th). In spite of these favorable factors, Vermont has among the highest costs of living in the United States, ranking 39th on our list for the metric. In recent years, the median agent salary has decreased as well, so it ranks 29th. This combination of characteristics makes the state a great fit for established agents who can afford the high cost of living while continuing to build their business without strong competition and with high home values. 5. New Hampshire New Hampshire is a good option for real estate agents because of the state’s low agent competition (third on our list) and its high percentage of owner-occupied homes (seventh). The state also has a median home value higher than more than two-thirds of the states, at $261,700. However, New Hampshire has a high cost of living compared to other states (37th on our list) and a notably low overall salary (43rd). This can make it a difficult environment for new agents. However, the Granite State is known for its natural beauty and the recent influx of high-tech industries, which make it a huge draw for new homebuyers and, therefore, real estate agents. 6. Utah One of the few Western states in the top 10, Utah is among the best states to be a real estate agent because of the higher percentage of owner-occupied homes (70.6% and ninth on our list). The state also ranks well because of the high median home value (11th at $279,100), which increases agent salaries (sixth). Utah does, however, have more agent competition than most of the other states, ranking 38th on our list. Even so, the state’s average cost of living (27th) makes it a great place to start or build a real estate career. Plus, the state is expected to double its population by 2065, which will have a huge impact on the local housing market—especially for agents who specialize in new development. 7. Iowa Iowa ranks seventh on our list because of the high percentage of owner-occupied homes (70.5% at 10th on our list) plus low cost of living (13th). Although agent competition has increased slightly (18th), it’s easier to establish and sustain a successful real estate career in Iowa than in the majority of states. Consistent with the state’s low cost of living, however, the average agent salary in Iowa is lower than half of the other states, at about $54,610. The state ranked 43rd on our list for median home value, with a median home value of $147,800. However, the Iowa Association of Realtors' housing stats reveal that median sale prices increased by 7.1% in 2020. 8. Maine Tied for seventh, Maine offers real estate agents excellent career opportunities largely due to the high percentage of owner-occupied homes (72.2% and second on the list). The state also ranks better than over half the states for agent competition (19th). This combination of rankings makes the state a great option for new agents because there is only a moderate barrier to entry. However, the median home value in Maine is $190,400, making it just below average on our list. That impacts overall agent salary, which decreased to the 28th spot in rankings. What’s more, the overall cost of living is quite high (40th on our list), so agents will be best served if they choose a submarket with higher property values than the state average. For example, consider focusing on a coastal area like York, Rockport, or Bar Harbor, where you can manage vacation rentals or represent buyers and sellers of second homes. 9. Mississippi Mississippi ranks in the overall top 10 best states to live in primarily because of its low cost of living—number 1 on our list. There is also a relatively low amount of agent competition (15th) and homeownership rates (67.3%, which ranks 19th). These factors make it an ideal location for agents to start and establish a real estate career. However, the state with the lowest cost of living also has the lowest median home value at only $119,000. Surprisingly, even with low home values, Mississippi real estate agents make it into the top half of states with a median agent salary of $57,030 (24th). Although the low home values result in lower commissions from each transaction, the homeownership rates and low competition allow agents to make more transactions. 10. South Dakota South Dakota rounds out the top 10 best states for real estate agents, but interestingly does not rank in the top 10 for any of the five criteria. It beats out other states because of the balance between low agent competition (13th), agent salary (16th), and owner-occupied homes (18th). Homes in South Dakota have a low value, at an average of only $167,100 and in 36th place. However, even with low home values and a moderate cost of living (29th), real estate agents can make more sales because of low competition. Biggest Gains & Losses While Wyoming and Michigan held on to their spots as the two best states to be a real estate agent, many other states’ rankings changed notably. Gains Montana moved up 17 rankings primarily because of a significant improvement in agent salary (from 41st all the way to 11th). Louisiana also moved up 15 ranks because of changes in agent salary and owner-occupied homes, even though the individual rankings for agent competition and cost of living decreased slightly. Both Kentucky (from 48 to 34) and Kansas (from 36 to 24) saw the biggest improvements in agent competition and agent salary, which led to significant improvements in their overall rankings. On the other hand, Indiana moved up rankings significantly even though many of their individual criteria rankings did not change significantly. Losses One of the top 10 states in 2019, Alaska, plummeted all the way to 24th after losing some points for agent competitiveness and agent salary. Similarly, North Carolina previously ranked 22nd for agent salary, but dropped to 42nd with a median of only $62,570. They also lost ranking spots in almost every other category, which caused their overall rankings to fall 16 spots. Interestingly, the three remaining losses came from states that had very minimal changes in individual rankings. New York and Hawaii continue to rank number one for agent salary and home value, respectively. In California, the only ranking that dipped slightly was agent salary, but it still caused the state to plummet from 18 to 32. The losses in these three states were mostly because of improved rankings from others. Research Methodology To determine the best states to be a real estate agent, we examined factors that indicate an area’s strengths and weaknesses for new and existing real estate agents in terms of earning potential. We also looked for areas with opportunity for growth as well as potential threats to success. In particular, we evaluated the following six key metrics: Agent salary Cost of living Home values Homeownership rate Number of owner-occupied homes Agent competition Each of the categories was given equal weight based on the importance of each metric to the real estate profession. We then averaged the rankings for each state to obtain an overall ranking. Agent Salary To evaluate states based on real estate agent earning capacity, we ranked each for annual median real estate agent salary and annual mean real estate agent salary. These data were calculated by the Bureau of Labor Statistics (BLS) based on “year-round, full-time” hours and reported survey data from real estate agents. Cost of Living We included cost of living in our rankings to adjust for average agent salaries in each state. Cost of living information was obtained from the World Population Review and represents data from 2020. Median Home Value We obtained median home value data for 2020 from the United States Census Bureau. This metric represents the median value of homes in each state. In addition to being an indicator for real estate agent commission potential, the average home value also reflects the overall health of a state’s housing market and its economy in general. Homeownership Homeownership rates were also taken from the 2020 U.S. Census Bureau data, which reflects the percentage of adults in the state who own a home. Typically, states with a lower cost of living will have a higher percentage of homeownership and rank higher among all states. Owner-occupied Homes The percentage of homes that are owner-occupied represents how prevalent homeownership is in each state. Higher rates of owner-occupied homes demonstrate a higher likelihood of homeownership in the future, which suggests opportunities for new construction, new listings, and increased need for buyer’s agents. Data was compiled by the U.S. Census Bureau in 2020. Agent Competition We measured real estate agent competition based on Bureau of Labor Statistics (BLS) data about the number of real estate agents per 1,000 workforce members in each state. This data point is a single number representing the ratio of agents in each state to the national average. States with fewer agents and a lower location quotient were ranked higher in this study because it shows there is less competition. Curious how your state ranks per each of these criteria? Select a state below and find out how it ranks: Select State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Bottom Line Choosing a state with a healthy real estate market and low cost of living can have a substantial impact on the success of your career as an agent. If you’re contemplating a move, check out Western states like Wyoming, Midwestern states like Iowa, Michigan, and South Dakota, or Northeastern states like Vermont, New Hampshire, and Maine. No matter which state you choose, can help you meet the state’s licensing requirements and take the courses necessary to earn your license. In addition to offering prelicensing courses, they provide a range of continuing education courses to help maintain your license. to learn more.

A real estate company is a brokerage—either national or local—that employs licensed real estate agents who represent local buyers and sellers. We compared 11 national real estate brokerages and chose the top six to work for based on commissions, fees, training, brand recognition, and marketing efforts. As a result, we found the top six real estate companies to work for in 2021 to be: : (Best Overall) Agents seeking a high commission structure and continuing education opportunities : New agents who want tools, support, and marketing to help them grow : Established agents wanting to customize commission splits and desk fees : Tech-savvy agents wanting tools for marketing, lead capture, and more : Professionals who want a virtual brokerage with access to endless online tools and resources : Agents prioritizing brokerage brand recognition Signing with a brokerage is only one part of the requirements for becoming a real estate agent. You also have to meet state education requirements and pass a licensing exam. If you have not received your license, consider visiting , as this online school offers the required classes as well as professional development resources at an affordable price. to learn more about Colibri Real Estate’ “Pass or Don’t Pay Guarantee.” Alternative: Regional Real Estate Companies While we chose to highlight nationally recognized companies because they serve the largest audience, it is worth noting that local brokerages often give an agent more mentorship opportunities and room to shape a company. This means that if you are looking to start slowly and learn the ropes from a seasoned professional, you may be better off working with a smaller, regional brokerage. Therefore, if you already have an established sphere of influence and are looking for an option that will give you a greater sense of ownership in the company’s success as well as camaraderie, take the time to compare these companies against local or regional brokerages in your community. For more guidance as to which type of brokerage might be best for you, visit our article on how to choose a real estate company. Frequently Asked Questions (FAQs) Do you get a base salary as a real estate agent? Agents typically do not earn a paycheck until their first sale, so you should be financially prepared to be in business a few months without income. The only exception is joining a company like Redfin, which employs agents as full-time, salaried employees. Do I have to sign with a brokerage? Signing with a sponsoring broker is required by law in all states; legally, you have to associate your license with an established brokerage. Instead of a physical office, however, you can sign with a virtual broker like eXp Realty (mentioned previously) or an alternative known as (if available in your state). Or, get additional guidance by reading our article on finding a sponsoring broker. Will a brokerage train me to get my real estate license? You cannot start working for any broker without a real estate license. Your broker will provide some training to help you grow in your field; however, you have to complete your real estate license on your own after taking prep courses from a real estate school. Here are some of the best online real estate schools. Bottom Line Deciding which is the best real estate broker to work for depends on your needs and career goals. We considered the fees, commissions, training programs, marketing, and growth opportunities to identify Keller Williams as the best overall real estate company in 2021. Not only do they boast tremendous growth opportunities, but they offer exceptional training and impressive commission splits. How We Evaluated the Best Real Estate Companies The brokerage you choose to work for can heavily influence an agent’s potential for success, but it can be difficult to change brokerages after getting started. This is why it is best to find out all you can about the best real estate broker to work for before making a commitment. To help, we evaluated popular national brokers based on their commission split, desk fees, training, brand recognition, and marketing efforts to promote agents. We found Keller Williams to be the best nationally recognized real estate broker to work for. This is because the well-known brand offers agents a generous commission structure with affordable desk fees, ongoing training opportunities for professional growth, and profit sharing. You can learn more about what factors went into our evaluation, and what weight we placed on each criterion, by clicking below:

Success in real estate depends on an agent’s ability to negotiate deals, manage appointments, and serve clients. You also have to stay on top of industry news and trends. However, the best real estate agent tips for success are those that help generate a constant stream of high-quality leads. The following 14 tips will help you become a more successful agent in 2021: 1. Create a Business Plan At the end of the previous year, each one of us should revisit or put together a business plan for the following year. This might seem like a burdensome task, but it will give you insights as to what activities may have helped a business grow over the past year and what may have failed. Think of a business plan as a recipe or set of instructions you can use to repeat what worked again and again. In real estate, we equate success and failure to whether a transaction closed and if we made money. However, achieving long-term success is not always that simple. While some of us think we can just go by the “seat of our pants and just wing it,” know that if you don’t have a plan, you just got lucky. A business plan forces you to analyze where your business came from as well as the success of lead generation systems. This secondary benefit is also important, as real estate agents, especially newer real estate agents, often invest money in systems that do not give us a financial return. However, we usually don’t realize if the system isn’t earning us money until we can’t pay our bills, or don’t have anything in escrow. If you aren’t regularly revisiting your business plan, you will find yourself in a fight-or-flight situation, scrambling to create future income almost every single time. For help getting started with this task, check out our article on how to create a real estate business plan. 2. Use a Database to Categorize Your Contacts When we first become a real estate agent, we often put everyone and anyone we meet in our contact database. However, over time, you will find that some leads are more likely to result in the purchase or sale of a home than others. This is why it is important to categorize contacts so that time and resources are best spent on those clients who refer frequent business to you. The easiest way to organize your database is to put clients in three different groups. Your first group is your hot leads. These are clients who always have you “top of mind.” Anytime someone hears that a real estate agent is needed, you are the first real estate agent the client recommends. Take very good care of your hot leads. When you show genuine gratitude to those who refer business to you, the money will come. The second group is your warm leads. These are clients who may refer to you only on occasion, but still have potential to be moved into your hot lead group with more nurturing. The last group are cold leads. These are folks you’ve helped, but have never referred another lead your way. While you should spend more of your time following up with the other groups, don’t write these folks off. These clients still know how you do business and may refer you to a lead in the future. 3. Work Your Sphere of Influence The people who know, love, and trust you are the best sources of leads and future business. These folks sing your praises and know firsthand how you handle your business. You want to make sure to consistently stay in touch or “in the flow” with this group of folks since they will refer you to family members and close friends. However, you don’t want to be considered desperate and touch base too frequently. Holidays, birthdays, and anniversaries are a great way to stay in touch more often and not look like you are chasing business. This group will also talk to each other and possibly compare your services, your commission rate, and closing gifts. I am not suggesting that you have to clone each of your transactions to match what you did prior, since every transaction is unique. Just get ready for potential uncomfortable questions if you significantly change the way you do business. 4. Make Use of Online Tools to Get Organized Time is of the essence in real estate. If you do not have organized systems, you are going to waste a lot of time. I know that many times you hear the phrases, “I am spinning my wheels” or “time is money.” With the advance of technology, you should have whatever you need to handle a real estate transaction at your fingertips. A cloud-based system, , for example, is an excellent resource that I use to stay on top of my escrows, whether I am in or out of the office. Dropbox is also compatible on my phone, laptop, and standalone computer. As real estate agents, we are multitasking all the time. We are working a deal on the phone while driving to another client. You must have task-based systems so that you are reminded of what task needs to be done next. Another helpful tool for staying on top of your deals is to utilize a contact relationship management (CRM) platform. In addition to helping you categorize your contacts, these tools can also be used for saving reminders and prompting you for next steps. Considering our days are filled with appointments, meetings, showings, and possible distractions, tools like these reduce the risk of someone getting off track, which can cost business opportunities. One example of a CRM to consider is . This is because not only can you log into the system to be reminded of the tasks you have due that day, it also lets you connect to potential clients via text and email without leaving the platform. It even features a virtual assistant powered by artificial intelligence, which can help to automatically categorize a client based on their level of interaction, saving you even more time. Learn more by visiting LionDesk. 5. Acknowledge Real Estate Is a Full-time Commitment Real estate is not a club that you join and sometimes choose not to go to the meetings. It is a full-time commitment and a full-time job. I am not sure if there was a rumor or urban legend that states that you could get into real estate, only do it part time, and still be successful. If you think you can do real estate part time, you have already set yourself for failure. Real estate is a full-time commitment 100% of the time. Set your expectations and schedule your time accordingly. 6. Invest in Brand Building Whether you work for a large or small office, or perhaps have opened your own real estate company, name and brand recognition are important. You need to create your own look and feel that people in your community recognize. For example, when we look at a logo with a smile and an arrow, we immediately know it is Amazon. A green circle with a mermaid in the middle instantly tells us we are at Starbucks. This is called your brand. While these two examples have the benefit of large marketing departments that focus entirely on this concept, having a brand is just as important for a boutique office for building trust—and memorability—in the community. At minimum, you need to have a logo, set color pattern, or tagline as part of your marketing plan. As a smaller brokerage, I focus my branding on a more personal touch. When you are in Tracy, California, and see a yellow and green sign with a tagline that says, “Hire me as your realtor and you will have a friend for life,” you know it is At Home Real Estate Group. 7. Re-evaluate Your Website Having a website is an important component for prospective clients to find us with modern technology. In fact, many would say that if you don’t have a website, you don’t exist. Information is truly at our fingertips, 24/7. Many real estate agents think that they need to pack their website with extensive information that may contain a lot of words and the use of a tiny font. The truth is, the design, word, and picture placement on your website needs to be clean, neat, simple, and to the point, like the ones you can create with . You want to give the visitor enough information to be interested in your services, as well as a need to have you contact them to answer any additional questions. For more tips on how to make the best use of your website, check out our article on the subject. 8. Learn How to Say No As real estate agents, we are always being asked to get involved in many different committees. However, if you say yes to every cause that comes your way, you risk overextending yourself. Please remember, for every yes you say to a request for your time, you are actually saying no to yourself and those important people around you. Therefore, be selective about how you spend your time. You will feel better about yourself, and your clients will feel that energy resulting in a more positive transaction. 9. Call Your Clients Quarterly Did you know that the number one thing our clients want from us is care and concern. Calling your client quarterly and truly listening to what they are saying will bring you business opportunities. This is where it is also helpful to have a CRM like LionDesk, because these tools let you take notes on the “pleasure and pain” items that your client is experiencing. For example, is your client celebrating a happy occasion, or by chance did they experience an event that made them sad? Listen for things you can do to make their lives easier. This is great information to recap and ask about on a future call. Please know that these calls will take some time, but the return will be great and worth the time investment. 10. Schedule a Campaign of Postcard Mailers Along with quarterly calls, website presence, and company branding, another way to stay top of mind with your clients is to give them something of worth. One of these items can be a postcard mailer that includes gardening tips for the spring. Another mailer can be a postcard reminding your clients to change their clocks during daylight saving time. These postcards need to be easy to read and contain a “tidbit” of useful information. Many brokerages offer agents a set number of postcards. However, if yours doesn’t, or if you would like to simply add more, a company like ProspectsPLUS makes it easy to create postcards designed with real estate agents and brokers in mind, and can help you create targeted mailing lists. To learn more, visit ProspectsPLUS. 11. Schedule Holiday Pop-bys Truly one of most well-received marketing campaigns has been holiday pop-bys. I take my hot lead group of clients and choose 100 clients to personally visit. When I visit these clients, I bring them a holiday item. During Thanksgiving, I dropped off jam with a note, “Real Estate Is My Jam.” If the client was not home, I left the item at their front door. My favorite pop-by this year was holiday wrapping paper that included a note, “Looking forward to wrapping up 2020.” The cost of this campaign was extremely reasonable and was well-received by my clients. 12. Provide Yearly Market Analysis Whether the market is hot or stagnant, a homeowner always wants to know the market value of their home. Completing a yearly market analysis of your client’s anniversary will be welcomed. I would suggest you touch base with your client and wish them a happy anniversary. I prefer to call my clients and speak with them personally. During this call, I wish them a happy anniversary and ask them questions that may involve the family, their job, or “what’s new.” The natural progression of the conversation will usually include the present market. I share with them that I have run a market analysis and give them the option to have the information emailed or potentially presented in person. 13. Get Involved in Community Events The community that we live in has demonstrated great support for local real estate agents. While it isn’t possible to play a major role in every cause, as real estate agents we still need to support our community and the events that are organized. Fundraising, or a cause that needs financial assistance or physical help, is a great way for real estate agents to get involved, and is a terrific networking opportunity. I do remind you to participate with a giving heart and not expect business referrals in return. A genuine giver will always be rewarded. 14. Set Time to Implement Affirmations & Positive Self-talk Most real estate agents have high expectations of their self-performance. When goals are not met and tasks are not completed, we can talk negatively to ourselves. The negative running loop that goes through your thoughts can sabotage success. When these thoughts arise, it is important to change the self-talk verbiage in your mind to say something positive and productive. Making this a repetitive practice or habit will help you talk more positively. Consider scheduling “you time” on your calendar several times a week. This should be a block of time for you to step away from the stress and the business cycle, even for just an hour. It is also a good idea to implement helpful tools for self-care like saying and writing daily affirmations, as this will allow you an opportunity to shift negative thoughts to positive ones. When I am having a challenging day, I find that going on a walk and taking deep breaths of fresh air gives me incredible energy. I also love the energy of music that helps to shift my mood. However, my favorite “go-to” when having a difficult day is to call clients who lift me up in spirit and remind me why I love selling real estate. I call it a real estate pep talk. Everyone needs to feel the love sometimes. Bottom Line The most successful tip, in addition to the 14 tips listed above, is very basic. Just show up. Everyone—no matter how they start—must put in the time and effort to get results. It also isn’t about working harder, but working smarter. My motto in real estate has always been "selling homes with patience, integrity, compassion, and confidence." Wishing you good health and continued success in 2021.

Florida real estate license renewals are due every two years for agents and brokers. First-time renewals require the completion of post-licensing courses, and all renewals require 14 hours of continuing education (CE) credits. After you choose a real estate school and complete your CE hours, you can submit your renewal application and renewal fee. These are the four steps to renew your Florida real estate license. 1. Determine Renewal Requirements After you receive your Florida real estate agent or broker license, you are required to complete a post-licensing course within 18-24 months. Additionally, all Florida real estate license renewals must be completed every two years. This means that the requirements for your first real estate license renewal will be different from the subsequent renewals. These are two different renewal requirements you may have for your Florida license renewal. First-Time Florida Real Estate License Renewals The Florida real estate license renewal deadline is every two years, and the post-licensing courses must be completed within two years of earning your license for the first time. Although the continuing education requirements for agents and brokers are always the same, the first Florida license renewal for real estate agents and brokers will have different requirements than the rest. For example, Florida real estate agents are required to take 45 hours of post-licensing education, and brokers are required to take 60 hours. The post-licensing courses can be taken online or in person, but they must be completed within 18 - 24 months of receiving your license, and before your first license renewal. Subsequent Florida Real Estate License Renewals After your first Florida real estate license renewal, your only requirement for subsequent renewals is to complete 14 hours of continuing education credits. Within these 14 hours, six hours are mandatory courses, and the remaining eight hours can be elective choices. Each Florida real estate agent and broker must take three hours of “Florida Core Law,” and three hours of “Real Estate and Business Ethics.” 2. Choose a Real Estate School There are plenty of Florida real estate schools that offer courses in a classroom setting. However, online classes are extremely popular because of the affordable cost and the convenience of completing your required credit hours on your own time. There are numerous online real estate schools that offer continuing education and post-licensing courses for Florida real estate agents and brokers. When you are purchasing courses, consider each school’s course formats, cost, student reviews, and customer support. Here are the top three online schools for Florida real estate license renewals: Colibri Real Estate: Colibri Real Estate offers two affordable post-licensing packages for Florida real estate agents, costing between $99-$129. You can find a CE course package from their partner company, McKissock Learning, for only $19. Mbition – Learn Real Estate: Mbition offers fully online classes and packages at the most affordable prices. Their Florida post-licensing course for agents is $55, and the cost for brokers is $149. The CE package for agents and brokers is only $18.99. The CE Shop: The CE Shop is a nationally recognized online real estate school. Florida real estate agents can choose from two post-licensing courses for $99 each, and the package for brokers is $135. The CE package, which can be taken by agents and brokers, is only $19. When you are looking for an online school to complete the requirements for your real estate license renewal, make sure you also look at the course topics. You will benefit the most from choosing courses that apply to your real estate business. 3. Complete Post-Licensing Courses You must complete all post-licensing and continuing education (CE) hours before the renewal deadline, therefore you will need to plan ahead. The post-licensing requirements for agents are different from the requirements for brokers. Also, there are more required hours for a first time renewal, than subsequent renewals. For example, you will only need to complete 14 hours of CE following your first real estate license renewal. These are the post-licensing requirements for first-time Florida real estate agents and brokers. Post-Licensing for Florida Real Estate Agents After you become a licensed Florida real estate agent, you must complete 45 hours of post-licensing courses within 18-24 months. There are no mandatory post-license course topics, but you must purchase them from a school that is approved by the state. Most real estate schools offer a complete 45-hour post-license package which covers many topics. For example, the post-license course package from Colibri Real Estate includes these topics: Managing Your Business and Your Time Prospecting and Listing Appointments Brokerage Relationships and Transaction Brokerage Duties The Mortgage Process This package is meant to support new agents by diving deeper into topics that will help them build a successful real estate business. If you do not want to purchase a package, some real estate schools, like the CE shop, allow you to purchase courses individually. Post-Licensing for Florida Real Estate Brokers After you pass your broker’s exam and receive your real estate broker license, you are required to complete 60 hours of post-licensing courses within 18-24 months. There are no mandatory course topics, but you will find that the approved real estate schools offer topics centered around the same concepts. For example, the post-license course package for brokers from the CE Shop covers these topics: Real Estate Finance (30 hours) Real Estate Brokerage (30 hours) The cost for this 60-hour package is $135. If you are willing to spend a little bit more money, you can buy 30-hour courses individually for $89. This would give you the option of replacing one of the above course topics with a different course option, “Real Estate Investment.” 4. Complete Continuing Education Coursework While post-licensing courses are only required in the first two years of having your license, continuing education (CE) courses are required for all Florida real estate license renewals. Whether it is your first renewal or your 10th, you must complete 14 hours of continuing education credit hours every renewal period, which is every two years. Within the 14 required hours, there will be six total hours of mandatory courses. Three hours will cover “Florida core law,” and three hours will cover “real estate and business ethics.” The remaining eight hours are elective courses, which means you can choose the topics. You can do this by purchasing courses from a real estate school individually, or finding a 14-hour package that covers elective topics applicable to your business. 5. Submit Documents and Complete License Renewal Once you have completed all your Florida real estate license renewal hours, you can submit your renewal documents. You will need your course completion documents and the renewal fee of $32 for agents and $36 for brokers. If you have not created an online services account with the Florida Department of Business and Professional Regulation (DBPR), you will need to create one to submit your renewal. Frequently Asked Questions (FAQs) How much does real estate license renewal cost in Florida? The Florida real estate license renewal fee is $32 for agents and $36 for brokers. You must pay this fee through online services on the Florida Department of Business and Professional Regulation (DBPR) website. How long can a Florida real estate license be inactive? Florida real estate agents who are not actively participating in real estate transactions can have a license that is either voluntary inactive or involuntary inactive. You can maintain a voluntary inactive license indefinitely, but you must continue paying the renewal fee and completing continuing education (CE) credits every two years. Voluntary inactive real estate agents can activate their license at any time by completing a form. However, if you miss the Florida real estate renewal deadline, you automatically become involuntarily inactive. Involuntary inactive Florida real estate agents have 12 months to complete CE hours and submit their license renewal fee and late fee to become active again. If it has been more than 12 months, you will have to complete 28 hours of CE to reactivate your license. Can I renew my Florida real estate license after it expires? If your license expires, you will be ineligible for license reactivation. An expired license cannot be reinstated. In order to receive another license, you will have to complete all pre-licensing hours again and pass the real estate exam a second time. Your Florida real estate license will only expire if you do not complete your Florida post-license requirements by your first renewal. However, if you completed your post-licensing courses but did not complete the required CE hours, your license will simply be put on involuntary inactive status. You can submit your CE hours, renewal fee, and a late fee within 12 months to become active again. After 12 months of being an involuntary inactive agent, you will need to submit 28 hours of real estate education to reactivate your license. Bottom Line: Florida Real Estate License Renewal Renewing your Florida real estate license as an agent or broker is a very straightforward process. As long as you plan ahead to complete all of your post-license and CE hours, you can complete your Florida license renewal easily online. If you are looking for a high-quality online school that offers post-licensing and continuing education requirements to renew your Florida real estate license, check out Colibri Real Estate. Their online courses have been highly rated by thousands of real estate professionals, and you can pay as little as $19 for your CE credits. Click here to see more details.

Every state requires real estate agents and brokers to periodically renew their licenses. Oregon real estate license renewals are due every two years and require you to complete 30 hours of continuing education (CE) credit hours and submit a renewal fee. Since Oregon is a single-licensure state, all brokers have the same license renewal requirements. These are the four steps needed for your Oregon real estate license renewal: 1. Research Oregon’s Renewal Requirements Since Oregon is a single licensure state, you will be a real estate agent as well as a broker as soon as you receive your license for the first time. You can then decide to upgrade your license at any time to become a principal broker. When it’s time to renew either type of license, be assured that Oregon’s real estate license renewal requirements and process overall is one of the most straightforward in the whole country. The Oregon real estate license renewal requirements are 30 hours for all brokers. While there is some flexibility in what courses you take in follow-up renewals, if it is your first time renewing your Oregon real estate license, you will also be required to complete a list of mandatory topics. For example, you must take the Oregon Law and Rule Required Course (LARRC), and 27 hours of Advanced Practices Courses, which are divided into six regulation-required topics. These are the six required topics for your first time Oregon real estate license renewal: Business Ethics: This is different from the NAR-approved course, but discusses important parts of running an ethical real estate business. The Duty to Disclose: You must be familiar with Oregon’s disclosure laws in order to assist your sellers. Agency Law: This topic covers how to have an appropriate relationship with your clients and the laws relating to your contract. Real Estate Disciplinary Actions: This discusses in detail what happens when real estate transactions or professionals break laws. Economics and the Real Estate Brokerage Business: In order to understand the financial components of your brokerage, you need to know the economics. Property Management: Even if you do not participate in managing properties, it’s important to understand property management in order to assist clients. Pro Tip: If you purchase a CE package, make sure it is specifically for first-time renewals or includes “Broker Advanced Practices.” The specific courses in this package are required. For your subsequent renewals, you can purchase CE credits individually or as a package with a larger variety of course topics. 2. Choose a Real Estate School You can complete your Oregon real estate license renewal requirements online or in a classroom setting. There are plenty of brick and mortar schools in Oregon and even more online schools that offer Oregon CE classes. Many Oregon real estate brokers choose to complete their CE requirements online because of the convenience and affordability. Depending on the real estate school you choose, you can also find types of online learning. Here are the top three online schools for Oregon real estate license renewals: : Kaplan offers online CE classes for your Oregon license renewal in two different formats; online and on-demand. It also offers a full package as well as a variety of elective courses to choose from. Mbition – Learn Real Estate: Mbition offers a full package of the Oregon real estate license renewal requirements for both first-time and subsequent renewals. The packages are only $104 each, which makes it the most affordable choice. McKissock Learning: All of McKissock’s courses are offered through its online platform. It offers a 30-hour CE package, many individual elective courses, and a monthly CE membership. If you want constant access to all of McKissock’s CE courses and its many additional resources, this would be your best choice. When you are choosing your online real estate school, make sure to consider the course topics, cost, course formats, and student reviews. The Oregon continuing education requirements can be an opportunity to grow your skills and make your business more profitable. 3. Complete Continuing Education Coursework Once you choose your real estate school, you must complete all of your continuing education requirements before your renewal deadline. All Oregon real estate license renewal requirements will take around 30 hours to complete, then you will have to wait for your completion certificate. Depending on which real estate school you attend, this can take anywhere between a few days to a month to receive. If you have a real estate license in another state, you may be eligible for reciprocity agreements. Oregon currently has reciprocity agreements with Alabama, Georgia, Nebraska, South Dakota, and the Canadian province of Alberta. However, Oregon does require all real estate agents and brokers from other states wishing to operate in their state to complete Oregon’s licensing steps. 4. Submit Documents & Complete Renewal You can apply for your Oregon real estate license renewal up to 30 days before your renewal deadline. After your 30 hours of CE is completed and you have your completion certificate, you can enter your course information into eLicense at any time. In order to renew your license, you simply have to fill out the renewal application through online services and pay the $300 renewal fee online. Once you submit the application and payment, you will receive an email confirmation of your payment. When your renewal is approved, you will also receive an email notification. 5. Make the Most of Your License Renewal Once you renew your Oregon real estate license, you may want to ensure that your career is set up for success. The best way to do this is to implement a marketing plan that works to bring you new business, even when you aren’t. Here are six important factors in successful real estate marketing plans: Website: This is the perfect way to make yourself easily accessible to new and existing clients. Make it easy to get new leads, new clients, and new business 24/7. Lead Generation: Lead generation is a way to attract potential clients and begin building a relationship with them. Using automated lead generation strategies means that you can be gathering new leads while you sleep. Email Marketing: Creating automated email sequences is the perfect way to nurture your new leads and stay in contact with previous clients. Social Media: Using social media platforms can help you network, show properties, and even showcase good reviews. SEO: Search engine optimization means that when clients search, Google leads them to you. You can’t get consistent business if no one knows about you. Ads: Many real estate agents and brokers utilize Facebook and Google ads to get more eyes on their website and to bring in more leads. Pro Tip: Real estate agents who’d rather spend more time closing deals than managing a suite of software should consider an all-in-one tool like InCom. InCom combines the lead management power of a CRM with online marketing, letting you grow your business with a custom-designed real estate website. It also includes social media integration and bulk email messaging. If you’re ready to double your success over the next renewal period, InCom is the perfect way to start. Frequently Asked Questions (FAQs) How do I renew an inactive Oregon real estate license? Before you can reactivate your license, you will need to complete your continuing education hours. If those are already completed, you have to pay a $150 activation fee through online services for your license to be activated. If your license has been inactive for more than two years, you will have to take and pass the reactivation exam. You will also have a $150 activation fee. How much does it cost to renew my Oregon real estate license? The Oregon real estate license renewal fee is $300. If your license is inactive or if you submit your renewal application late, you will pay additional fees. What if I miss my Oregon real estate renewal deadline? If you miss the Oregon real estate license renewal deadline, you can still submit your completed CE credits and the renewal documents within one year. You will have to pay the $300 renewal fee and a $150 late fee. After one year passes, your license is considered lapsed. To receive a real estate license with a lapsed license, you have to then complete the same requirements as a new applicant. Bottom Line - Oregon Real Estate License Renewal Requirements Renewing your real estate license in Oregon is a simple process that can be completed online. By choosing the right real estate school, you can complete all Oregon real estate license renewal requirements and learn new skills to grow your business. If you’re looking for an online real estate school that offers a variety of elective course topics, check out Kaplan Real Estate Education. Kaplan’s instructor lead courses were written by agents for agents and, because they are offered online as well as face to face, they can be completed at a schedule that fits your schedule. Find out more about its Oregon real estate continuing education options here.

Flipping houses is generally not considered passive investing by the IRS. Tax rules define flipping as “active income,” and profits on flipped houses are treated as ordinary income with tax rates between 10% and 37%, not capital gains with a lower tax rate of 0% to 20%. Taxes on flipping houses will usually include self-employment tax. Flipping Houses: Capital Gains or Ordinary Income If an investor is categorized by the IRS as a “dealer,” the profits from property flips will be taxed at their ordinary income tax rate. The profit is calculated by subtracting the expenses, including the purchase price, from the final selling price. Tax brackets range from 10% to 37% for “active investors” earning active profits. According to the IRS, a real estate dealer purchases real estate and sells it to customers “in the ordinary course of his or her trade or business.” Most fix-and-flip investors are considered dealers; they hold their properties short term and the majority of their income is derived from flipping houses. Even real estate investors who occasionally flip houses are typically considered dealers and are taxed at ordinary income rates. On the contrary, profits made from properties held more than 12 months are typically subject to more favorable long-term capital gain brackets ranging from 0% to 20%. An investor can choose to rent the property out or occupy the property. To track fix-and-flip profits and expenses, we recommend using accounting software. Check out our best accounting software article. Ordinary Income Tax Consequences When Flipping Houses If you’re classified as a dealer, the profit from a flip will be taxed at your prevailing ordinary income rate. Currently, ordinary income tax rates range from 10% to 37%. In addition, the profit is subject to self-employment tax (the self-employed person’s equivalent to FICA), which is 15.3%, double what you typically pay as a W2 employee. As a dealer, the total tax consequence on a flip can range from as low as 25.3% to as high as 52.3%, depending on your tax bracket. Needless to say, you don’t want to misperceive your profits as fully belonging to you—Uncle Sam gets a big chunk of them. To do this correctly, you should use an accounting software like QuickBooks Online. Their software helps track what you spend with vendors, contractors, interest, and more—all items you can deduct from your gross profit. When Capital Gain Taxes Apply to Flipping Houses If you’re fortunate enough to avoid the dealer definition, deriving the majority of your income from flipping houses and selling the houses after one year, then you’ll be taxed at the lower capital gains rates on the profit from the sale. Keep in mind that this is rare for most flippers; the majority of the time they’re taxed at the ordinary income tax rate, but we want to mention it since it does happen. Even better, if you qualify for capital gains tax treatment, you don’t have to pay self-employment tax. Short-Term Capital Gains Taxes on House Flipping If the property is held less than 12 months, the profit from the flip isn’t given any preferential treatment. Short-term capital gain is taxed at ordinary income tax rates whether you’re defined as a dealer or investor. However, you have the benefit of not paying 15.3% self-employment tax, so there are good savings nonetheless. Long-Term Capital Gains Taxes on House Flipping If you hold property for one year+ and aren’t classified as a dealer, the profit from the flip will be taxed according to long-term capital gains rates. Currently, those rates range from 0% to 20% for most taxpayers. Compared to the one-two punch of ordinary income tax rates and self-employment tax, it’s quite a savings. “The trick that flippers know is if you hold onto the property for over a year, and then earn a profit on the sale, you’ll pay long-term capital gains taxes, which max out at 20%. The less-than-one year short-term capital gains trick is to play a flip that didn’t make a profit against one that did. This reduces the net capital gains you’ve earned and thus your taxes on them.” – Brian Murphy, Attorney, Real Estate Broker & Tax Prep Educator, Whether you own a small business and are filing as a dealer or are filing as an investor, provides customary tax software. You can quickly import all of your expenses and file your taxes online. If you have questions, you can chat with their team of support staff and have your return checked before filing so that you get your maximum refund—guaranteed. How Taxes on Flipping Houses Are Calculated Ultimately, you’re going to be taxed on your fix-and-flip profits, which is your sales price minus total expenses and deductions. The profit is calculated by subtracting the expenses, including the purchase price, from the final selling price. “One reason real estate taxation is so difficult is because of the active versus passive activity designation. The idea of flipping a house is that you intend to buy it, fix it up, and sell it. This means you’re considered a real estate dealer. Pretend your business is buying old lawn mowers, fixing them, and reselling them. This is a lawn mower business, just like flipping houses is also a business.” – Nathan Byers, CPA/PFS, Purchase Price The purchase price includes the cost of the house itself. While you might view closing costs, points, etc. as part of the purchase price, for ease of accounting, everything beyond the actual purchase of the building itself is best treated as an expense. When thinking about what your profit is, consider only the purchase price, not the amount you financed into your profit equation. The IRS doesn’t take your financing into consideration when calculating profit. However, you will be able to deduct the interest paid as an expense. Expenses Expenses beyond the purchase price include mortgage interest and points, loan fees, materials and supplies, labor, closing costs, taxes, professional services, and all the marketing costs and real estate agent commissions involved in selling the property. This table provides a good snapshot of what to consider. As with the purchase price, the IRS is not concerned about how you paid for an expense. As long as it was an expense tied to the property, it is typically deductible. For example, if you charge $10,000 on your Lowes credit card for building materials, that is considered an expense of renovating the property. Profit Profit is the amount you’ve cleared on the sale after all expenses, including the purchase price, are taken into consideration. One of the most important things you can do is keep excellent records of your expenses to ensure you deduct all renovation costs. The basic formula is: Transaction Profit = Selling Price - Purchase Price - Expenses. Keep in mind when calculating your profits for IRS reporting that this may not be your actual profit. For example, if you have to pay off mortgage debt used to finance the purchase and renovations, it eats into your bring-home funds. You can estimate this amount with this formula: Selling Price - Mortgage - Expenses = Bring home profit to the investor. Annual Taxes From there, you multiply your taxable profit by your ordinary income tax rate, which gives an estimated annual tax burden. Keep in mind that you can use losses from other fix and flips completed in the same year to offset gains. Example of Taxes on a House Flip Let’s run through a basic scenario to demonstrate the fundamentals of how flipping houses taxes are computed. We’ll use four assumptions: The investor is considered to be a dealer by IRS guidelines, so the profits will be subject to ordinary income tax. The property gets flipped in 10 months, further pinning it to ordinary income tax. The investor’s ordinary tax rate is 23%. We will consider the effect of self-employment tax. House Flipping Tax Example This flip deal has $26,500 in profit. The investor’s ordinary tax rate is 23%, so the income tax owed on the flip is $6,095 ($26,500 x 23%). In addition, the profit is subject to self-employment tax of 15.3%, so that’s an additional $4,055 ($26,500 x 15.3%). That brings the total taxes due to $10,150 on this flip. Starting with the $26,500 of profit, then subtracting what’s needed to pay taxes, the investor is left with $16,350. Keep in mind that the investor can’t consider the $26,500 as if it’s theirs to spend since Uncle Sam needs his portion. How to File & Pay Your House Flipping Taxes After you calculate your flipping houses taxes, you need to know when to file them and how to pay them. Generally, if you’re a sole proprietor, part of an LLC, or registered as an S corporation, and your house flipping business is making over $1,000 per year in profits, then you should pay quarterly taxes. If you’re not generating revenue yet or meet other exemptions, you will file your taxes at the end of the year. However, most house flippers pay quarterly taxes. These quarterly taxes are known as your estimated taxes, and they’re generally due April 15th, June 15th, September 15th, and January 15th of each year. For example, the income you earned flipping houses from January 1st through March 31st is due April 15th. However, if these dates fall on weekends or holidays, your taxes will be due the next business day. Schedule C Flipping Houses You will need to fill out a Schedule C for these estimated taxes. This form is also referred to as a 1040 Profit and Loss Form. For more information on how to fill this form out, check out our in-depth Schedule C guide that includes step-by-step instructions for filling out the form. Keep Good Tax Records When Flipping Real Estate Because expenses are so important to reducing your taxable income and therefore the amount of tax you’ll owe, it’s vital to keep good track of every expense related to a flip. No matter how insignificant some expenses may seem, they all matter—and they all add up. Whether you try a do-it-yourself route and set up a spreadsheet for your records, use real estate investing software, or accounting or bookkeeping software, be sure to do something to keep an accurate accounting of your flips. Come tax time, it will matter because every dollar that’s not spent on an expense is subject to taxes. “If you are considered a real estate dealer, there are some factors to consider. You can claim unlimited losses to offset ordinary income like salary and business income. You can also claim additional expenses related to dealer activities.” – Noel Dalmacio, CPA, CFP & founder, Dalmacio Accountancy Corporation How to Save Money on House Flipping Taxes While working around the basic consideration of flipping as active income is difficult, there are some special cases that can help you flip a property and not be subject to ordinary income tax. These include things like holding onto an investment for a longer period of time or even owning the property as your primary residence. Here we discuss four ways to reduce your taxes when flipping houses: 1. Hold Investment Property for More Than a Year If you find yourself in the category able to pay capital gains tax instead of ordinary income tax, forecast whether holding the property for a year or more will work. Remember that if you hold the property for a year or more, you are subject to long-term capital gains tax rather than short-term. Using our example above with the $26,500 profit, if you held the property sufficiently long, you would likely owe 15% or less in long-term capital gains tax. Moreover, you would not be required to pay self-employment tax because it’s considered an investment and not active income. So, your tax owed would be $3,975 or less as opposed to over $10,000 in the case above. 2. Make Property Your Primary Residence Before Flipping It If you are casually flipping a single property, consider whether you could move into it as your primary residence after renovations are complete. If you move into the property, you can likely shift the tax consideration on the eventual sale from active income to capital gains. Plus, current tax laws allow that, if you live in the property two of the five years prior to sale, you may be able to avoid tax on the gain entirely. “Section 121 of the Internal Revenue Code allows a taxpayer to elect to exclude up to $250,000 ($500,000 for taxpayers who file a joint return) of the gain from the sale of property owned and used as a 'principal residence.' 'Principal residence' means the property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating two years or more of the five years before the sale. This gain on the sale exclusion is limited to one sale or exchange every two years. So, it should be used selectively by flippers of multiple properties and elected with respect to the flip transaction likely to result in the largest taxable gain.” -- Brian J. Thompson, CPA & Attorney, BrianThompsonLaw.com 3. Do a Tax-Deferred Exchange for the Flip A tax-deferred exchange, also known as a 1031 exchange, allows you to roll over the gains on one property to another. To qualify for this, you’ll need to hold the property for a year or more (longer is better in the IRS’ eyes) and rent it to tenants. It can’t be used just on a quick-turn property. For more information, you can read our ultimate guide on 1031 like-kind exchanges. 4. Claim House Flipping Tax Deductions The IRS allows house flippers to write off certain expenses that pertain to purchasing, renovating, and selling properties. Writing off these expenses helps reduce your taxable income. You can deduct some expenses before you flip the property, but other expenses, such as capital expenditures, can’t be deducted until after the property sells. Expenses You Can Deduct When Flipping a House It’s important to know what expenses you can deduct when flipping a house. This will give you a better idea of how much your taxable income will be, so you can have money set aside to pay your taxes. This, in turn, affects your budget on your next flip. Some expenses you can deduct when flipping a house include: Capital expenditures (expenses related to buying and renovating a house with the intention to flip). These are deducted after you flip the property. Vehicle expenses, which can include gas and repairs or a standard mileage rate. Office expenses, including rent, utilities, and office supplies like printer ink and paper Building permits Mortgage interest What Determines Dealer Status for a Real Estate Flipper A business that regularly profits from selling an asset, whether it’s a property, a vehicle, or inventory, is classified as an active business. Therefore, an investor who flips properties will likely be classified by the IRS as an active business—a “dealer” in houses—and is subject to ordinary income tax on the profits. A fix-and-flip investor who flips a dozen houses a year, holds them for a very short period, and/or derives most of their income from their real estate flipping business will be considered a dealer, and the income will be taxed at higher ordinary income rates. This is in contrast to passive investment income such as a rental property on which, if eventually sold, the profits will be taxed at a more favorable capital gains rate. However, the IRS code isn’t particularly clear on what constitutes active versus passive income, and many factors are taken into consideration. These can include how many properties are flipped, if they’re owner occupied or rented for a period of time before resale, and how long they are held. If you’re an active fix and flipper who holds a property for less than one year, you’ll most likely be taxed at your ordinary income tax rate of 10% to 37%. Determining your taxation category and the rate you owe is complicated, and your tax professional should be involved. Frequently Asked Questions (FAQs) on House Flipping Taxes This guide breaks down house flipping taxes and discusses capital gains versus ordinary income when flipping houses. These are some frequently asked questions we’ve encountered and answers that might give you further insights. What Is the 70 Rule in House Flipping? The 70 rule tells investors the maximum they should pay for a property. The rule, which is a guideline in the industry, says an investor should not pay more than 70% of the estimated value of the property after they complete all their repairs and renovations (ARV). For example, if an investor wants to purchase a property with an ARV of $200,000 and $25,000 in needed repairs, they should pay $115,000 ($200,000 x 70% = $140,000; $140,000 - $25,000 = $115,000). What Are Other House Flipping Deductions? When thinking about your real estate investing expenses and deductions, make sure to consider things like transportation, home office, meals, and education like workshops, books, etc. Speak to your accountant to learn more and use an online tracking system like QuickBooks online to keep it easy. Can You Really Flip Houses with No Money? There are several ways to flip houses with no money, but you will need to contribute to a deal in creative ways (e.g., if you have building knowledge, contribute with your time and skills, or have a property you can use to cross collateralize for a hard money loan). Do I Need a License to Flip a House? Typically, you don’t need a particular state license to flip a house, but check with your state, as it could depend on how your business operates. For example, if you are a developer, some states require a contractor's license. In most cases, you will need to properly apply for permits and possibly a business license. Bottom Line: Flipping Houses Taxes In 2017, house flips hit an 11-year high, with over 200,000 flips in the U.S. Following this enthusiasm, you need to know what taxes you’re responsible for paying on your house flipping business. Profits from flipping houses are generally treated as ordinary income, not capital gains, so profits are subject to normal income tax and self-employment tax.

Rental property depreciation is a process that real estate investors use to deduct the costs associated with purchasing and improving an investment property. Depreciation of rental property happens over the course of the property’s useful life as determined by the IRS’ depreciation method. This is important for investors because rental property depreciation helps maximize tax savings. How Residential Rental Property Depreciation Works Residential rental property depreciation is a capital expense, which means it helps recover the costs you spend to acquire and improve your rental property. Depreciation expense is typically the largest tax deduction available to real estate investors and can help investors improve their cash flow by reducing their tax liabilities. This means every year you can reduce your taxable income without negatively impacting your cash flow. The standard method of depreciation in the United States is called the modified accelerated cost recovery system (MACRS). Under this system, the capitalized cost basis of property is recovered over a specified life by annual deductions for depreciation. There are two types of MACRS: general depreciation system (GDS) and alternative depreciation system (ADS). Throughout the article, we use GDS because it’s the most common system, and ADS is less common. Rental property depreciation is calculated over 27.5 years for residential property and 39 years for commercial property. These are the useful lives that the IRS deems for both types of properties. Keep in mind, real estate depreciation begins when the property is placed in service, meaning when you rent it out, not when you purchase it. Depreciation ends when you sell the property or take it out of service, such as if you decide to use it as your primary residence. Depreciation of rental property covers major repairs that are capitalized, but you can’t use it to offset the cost of rental property normal wear and tear. It only covers purchases and improvements, and there’s often a fine line between what is considered an improvement and what is considered a repair. It’s best to consult with your tax advisor about whether something is an improvement or a repair. For example, if you repair a few shingles on your roof, that’s considered a repair and is not depreciated. So, instead of depreciating the cost of the repairs, you can expense the full cost of the repair. In contrast, if you need to replace the entire roof, you would depreciate it over the useful life of the roof, which is 27.5 years, the same as the property to which its attached, determined by the IRS’ depreciation schedule because replacing the roof is not a repair but is considered an improvement. When calculating rental property depreciation, the useful life of common assets are: Appliances, carpeting & furniture: 5 years Office furniture & equipment: 7 years Fences & roads: 15 years Residential rental buildings, structures, furnaces & water pipes: 27.5 years Commercial buildings: 39 years What Properties Are Depreciable? The IRS determines what types of properties you can claim depreciation on. For instance, land, landscaping and a primary residence are not depreciable. In order for real estate depreciation to be applicable, you can’t place a property in service and sell it the same year you depreciate it. This means that you can’t rent out a property in January, sell it in April and claim depreciation on it that same year. Properties that fall into at least one of the following categories are typically depreciable: A rental property placed in service after 1986, which means it was used as a rental property after 1986 and is specific to the type of depreciation method you’re using; as we previously mentioned we use the GDS method An income-producing property that is expected to last more than one year, which is generally true of all rental properties Residential real estate used to produce income Owner-occupied commercial real estate like a building where you operate your business Income-producing commercial real estate like an office building or shopping center Multifamily properties like buildings with two or more separate units such as a duplex or triplex Rental Property Depreciation Method There are certain rental property depreciation rules that the IRS expects you to follow. They include using the MACRS that spreads costs and depreciation deductions over 27.5 years for residential properties and 39 years for commercial properties. Keep in mind that we are using the GDS of MACRS and not the ADS. Now, let’s look at the formula for MACRS which is the cost basis of the asset multiplied by the depreciation rate. The cost basis is the same as the purchase price of the property. You can find which depreciation rate you should use in one of the three tables the IRS provides in Publication 946. MACRS Formula Using GDS = Cost basis of the asset x Depreciation rate Let’s look at an example of how to use the MACRS formula. The IRS establishes that any residential rental property placed in service after 1986 is depreciated using the useful life of the property. Although the MACRS formula is simple, we suggest consulting with a tax professional to calculate MACRS because the depreciation rate used varies depending on the type of asset being depreciated. Although MACRS is used on the real estate itself, typically, the straight line depreciation method is used on other improvements. This means that these items can be depreciated and deducted over time such as a new roof or new windows, doors, plumbing systems, etc. For more information on rental property tax deduction rules, check out our in-depth guide on rental property tax deductions and benefits. Rental Property Depreciation Schedule A rental property depreciation schedule helps you value your assets, calculate your depreciation expenses, and calculate your capital expenses. A rental property depreciation schedule shows what kind of depreciation you can take and deduct each year. It shows the breakdown of the land value and the building value because you can only depreciate the building value. It’s based on the useful lifespan allowed by the IRS for the property type. A rental property depreciation schedule generally includes the: Property type you’re depreciating: Such as buildings and structures, office equipment, machinery, furniture or vehicles on a property Type of depreciation used: For example, if you’re using the more common GDS method or the alternative method (ADS) Cumulative depreciation to date: This is how much the asset has depreciated from the time it was put in service until the present date Future depreciation forecast: This is a prediction of how much depreciation the asset will incur during a certain period of time in the future Reporting Depreciation of Rental Property Now that you know what rental property depreciation is and how it works, you need to know where to report it, especially if you’re doing your own taxes. Although we do recommend working with a tax professional, it may be helpful to know where to report depreciation of rental property on your tax documents. Here are three steps to help with reporting residential rental property depreciation. 1. Use a Schedule E to Record Income and Expenses Typically, you will receive a 1040 federal income tax return, and you will use the Schedule E to record all of your rental property income and expenses. Generally, your accountant will help you fill this out. 2. Figure Out Your Net Gain or Net Loss After you fill out the Schedule E, you figure out if you had a net gain or a net loss and record how much it is on the 1040 form. One of the major expenses that should be listed on your Schedule E is your rental property depreciation. This is where you depreciate expenses that have a useful life of more than one year. Typical expenses that you need to depreciate on a rental property include: New roof Replacing a bathroom Replacing a kitchen The formula that you should use to depreciate these expenses is: Divide the total cost of the item by the useful life of the improvement Then you write that expense as a fraction. For example, if you spend $15,000 on a driveway with a 15-year useful life, you divide $15,000 by 15 and get $1,000. This means you can write off $1,000 per year during the driveway’s useful life. 3. Depreciate the Purchase of the Property You can do the same thing as in step 2 when you purchase the property, which is usually your largest real estate related expense. However, the useful life of a residential rental property building is 27.5 years, and the land can’t be depreciated, so you need to subtract the cost of the land from the total property cost. Let’s look at a quick example: You purchase a property for $300,000. The land is worth $125,000, and we already know the useful life of a residential building, according to the IRS is 27.5 years. Now, let’s figure out how much the building is worth by itself. We subtract the land from the total property cost and get $175,000. $300,000 - $125,000 = $175,000 Now, we know the building is worth $175,000, and we want to depreciate it over 27.5 years, so we divide it by 27.5 and get $6,363.64. $175,000 / 27.5 = $6,363.64 This is the amount you can take as a depreciation per year on the purchase of your investment property. This reduces your tax liability by $6,363.64 per year while keeping your cash flow the same. Basically, you’re adjusting your cost basis downward each year by the amount of depreciation taken. Rental Property Depreciation Recapture Rental property depreciation recapture is the gain that the real estate investor receives from selling the investment property, and it must be reported as income to the IRS. This can hurt an investor because it’s additional income that you have to pay taxes on based on your ordinary tax rate, which can be in addition to capital gains tax. Depreciation of rental property should be reported on IRS Form 4797. When you take depreciation, you’re adjusting the property’s cost basis downward. So, when you sell the property, you have to pay taxes on it because you previously offset some of your ordinary income taxes by claiming depreciation. Depreciation recapture is assessed when the property’s sales price exceeds its adjusted cost basis. An adjusted cost basis just means the net cost of the asset after it’s been adjusted for depreciation. We’re going to explain this in more detail in six steps. Keep in mind that capital gains tax on real estate is also due when you sell an investment property for more than you purchased it for. Part of the profit is taxed as a capital gain and may qualify for the 20 percent capital gains tax, and the other part of the profit is taxed at the ordinary tax rate, which is generally higher than the capital gains tax rate. Part of the profit that is taxed at the ordinary tax rate because it was depreciated over time. This can get complicated, so we suggest consulting with a tax professional. The IRS uses rental property depreciation recapture as a way to collect taxes on profits from the sale of a rental property. This is because the taxpayer was able to previously write depreciation off against their taxable income during their ownership of the property. Residential Rental Property Depreciation Recapture Example We’re going to show you six steps to calculate depreciation recapture. First, we need to know the tax basis of the property, which is the same as the property’s purchase price plus closing costs and any capitalized expenses. We also need to know the adjusted cost basis which is the purchase price minus the annual depreciation multiplied by the number of years of ownership. Now, let’s look at a rental property depreciation recapture example in six steps. 1. Purchase a Rental Property Let’s assume that Jane purchased a residential income producing property for $350,000. Now, let’s assume the property has an annual depreciation of $20,000, and Jane decides to sell the property after 11 years for $430,000. 2. Calculate the Adjusted Cost Basis of the Rental Property To figure out the adjusted cost basis, we use the purchase price minus the annual depreciation rate multiplied by the number of years of ownership, and we get $130,000. $350,000 - ($20,000 x 11) = $130,000 3. Calculate the Realized Gain on the Rental Property Then, we figure out the realized gain on the property by subtracting $130,000 from $430,000, and we get $300,000. 4. Calculate the Capital Gain on the Rental Property The capital gain will be $300,000 - ($20,000 x 11), which = $80,000, and so the recapture gain is $20,000 x 11, which is $220,000. 5. Know Your Tax Brackets Now, let’s assume a 20 percent capital gains tax and a 28 percent income tax bracket. The total amount of tax that Jane will pay on the rental property will be (0.20 x $80,000) + (0.28 x $220,000) = $16,000 + $61,600 = $77,600. 6. Calculate the Depreciation Recapture Amount The depreciation recapture amount is 0.28 x $220,000, which is your tax bracket, expressed as a percentage, multiplied by the recapture gain. The depreciation recapture amount will be $61,600. As you can see from the above example, it’s quite complicated, but you were able to figure out the depreciation recapture amount. So, now you know how much you will pay when you sell a property, and you can decide if it’s worth selling and what you need to sell it for. Now, let’s take a look at a couple of real estate professional’s thoughts on depreciation recapture. “This is the depreciation recapture tax, and it's designed to make sure you pay back the government roughly what you saved in taxes over the years. Remember that the depreciation expense saved you from being taxed at the ordinary income tax rates, which are up to 37 percent now.” — Domenick Tiziano, Owner, “Depreciation recapture usually applies to improved real estate because that real estate will generally increase in value over time while its improvements will depreciate with time and use. The recomputed basis will be used to determine any gain. If there is gain, it will be taxed as capital gain and, if there is a loss, it can be taken as a loss for the taxpayer.” — Brenda Di Bari, Commercial Real Estate Broker, Depreciation of Rental Property Frequently Asked Questions (FAQs) Below, we’re going to answer the most frequently asked questions about real estate depreciation, including rental property tax deductions because depreciation of rental property is one of the largest rental property tax deductions. What Depreciation Method Is Used for Rental Property? The depreciation method used for rental property is MACRS. There are two types of MACRS: ADS and GDS. GDS is the most common method that spreads the depreciation of rental property over its useful life, which the IRS considers to be 27.5 years for a residential property. What Happens to Real Estate Depreciation When You Sell the Property? When you sell your rental property, you typically have to pay a depreciation recapture tax if you sell the property for more than its depreciated value. The depreciation recapture tax is typically 20 percent plus the state income tax on the depreciation amount that you claimed. However, the exact amount depends on your income tax bracket. If you want to hold off on paying this depreciation recapture tax, you may want to consider a 1031 exchange. To find out more about a 1031 exchange, read our in-depth guide on section 1031 exchange. Do You Have to Take Real Estate Depreciation? You don’t have to take real estate depreciation. However, it’s recommended that you do because it’s one of the main rental property tax deductions. Also, the IRS assumes that you do take depreciation, so will have to pay a depreciation recapture tax when you sell the property whether or not you take the depreciation. The Bottom Line Real estate depreciation is a way to expense the costs of your rental property over time and lower your tax burden. Real estate depreciation is based on the type of property and its useful life as determined by the IRS. The IRS’ depreciation schedule for residential real estate is generally 27.5 years and 39 years for commercial property.

How to Read Your Rental Property Depreciation Calculator Results Cost basis: This is the original purchase price of the property plus all closing costs; if you’re unsure of your closing costs, they’re typically 2 to 5 percent of the purchase price Averages of rental property depreciation: The useful life of residential rental property is 27.5 years using the general depreciation system (GDS) of the modified accelerated cost recovery system (MACRS). What’s next: Using the residential rental property depreciation calculator you can determine how much depreciation expense you can deduct from your income each year based on purchase price and useful life, lowering your tax bills each year. How the Rental Property Depreciation Calculator Works Rental property depreciation is a process used to deduct the costs associated with purchasing and improving income-producing property. Rental property depreciation happens during the course of the property’s useful life as determined by the IRS’s depreciation method. The rental property depreciation calculator is used by investors to calculate the amount of depreciation per year as well as the total amount of depreciation during the asset’s useful life. Our rental property depreciation calculator uses straight line depreciation because the alternative is much more complicated. Our free rental property depreciation calculator should serve as a tool to help you estimate your property depreciation amount. However, we still recommend working with a tax professional. The real estate depreciation calculator shows you how much your depreciation is during the course of one year and the property’s useful life, according to the general MACRS depreciation method. It also displays a graph so you can see your depreciation during the course of multiple years, all the way up to 27.5 years for residential property. Who a Rental Property Depreciation Calculator Is Right For A rental property depreciation calculator is right for you if you own one or more residential rental property and want to calculate your expected depreciation on an annual basis or during the property’s useful life of 27.5 years. Our free rental property depreciation calculator shows the amount of depreciation, which can help you maximize your tax savings. A rental property depreciation calculator is typically right for: A residential real estate investor who owns single family homes, vacation rental properties or condos An investor who owns multifamily property which is typically a property with two or more separate residential units A commercial investor who is an owner-occupant and runs their business from their own commercial property A commercial real estate investor who owns income-producing commercial real estate like an office building or a shopping center Real estate investors who want to calculate depreciation on improvements they make to the property such as replacing the roof or renovating a kitchen or bathroom This rental property depreciation calculator can be used for more than just showing the depreciation of rental property. It can also be used to show the depreciation of improvements made to the rental property. These improvements include things like replacing all of the doors, windows or gutters on a property. The IRS has specific guidelines for what are considered improvements and what you can use as rental property deductions. This calculator is geared towards residential rental property depreciation, but you can still use it to show the depreciation of commercial real estate for one or more years. However, using the general MACRs method, commercial property typically has a useful life of 39 years, and the calculator only shows depreciation for up to 27.5 years. If you have further questions about what rental property depreciation is, how it’s used and what MACRS depreciation is, read our in-depth guide on residential rental property depreciation. Rental Property Depreciation Calculator Inputs When using our rental property depreciation calculator, you will be prompted to input your cost basis, the recovery period and the month and year the property was placed into service. Below, we’re going to go into more detail about each of these inputs. The inputs are needed so the real estate depreciation calculator can use them to calculate the amount of your depreciation. Cost Basis Cost basis is the first input that the rental property depreciation calculator is going to require. Cost basis is simply the purchase price of the property plus your closing costs. The purchase price is how much you actually paid for the property, not necessarily what it was listed for or what it’s worth today. You can find this number on your HUD-1 closing statement. Your closing costs are the extra expenses that you pay on top of the purchase price of the property. Average closing costs are 2 to 5 percent of the property’s purchase price and include things such as your lender fees, appraisal, rental property insurance, transfer taxes and more. You can also find these on your HUD-1 closing statement. However, if you’re not sure what your closing costs are, the calculator gives you a range from 2 to 5 percent from which to choose. Recovery Period The next rental property calculator input is the recovery period. This is the length of time the IRS requires you to depreciate the asset. If you want to depreciate your residential rental property, then the recovery period input is 27.5 years, which the calculator has auto-filled. However, if you instead want to depreciate an improvement made to the property, then you can select your own input from one to 27.5 years. Most large improvements such as a roof, replacing all of the windows or all of the doors on a residential rental property have a useful life of 27.5 years. This means they’re depreciated over 27.5 years just like residential rental property is. However, if you have vehicles or furniture or other items that you want to appreciate you will need to find out what their useful life is. You can find this information from IRS Publication 946 or by consulting with your tax professional. Placed in Service The next thing that you need to put into the calculator is the month and year the property was placed in service. This is important as it allows the rental property depreciation calculator to use this date and then go forward 27.5 years or however many years the property's useful life is. The term placed in service doesn’t refer to when you purchased the property. Instead, it refers to when you first rented out the property. You should be able to find this information from your files containing residential lease agreements for the property. Rental Property Depreciation Calculator Outputs After you put all of your inputs into the calculator, it will use them to calculate the rental property depreciation amount per year and over 27.5 years of the property’s useful life. You can then use the depreciation amount to know more about your rental property tax savings. You can also use it help you know how much of your rental property improvement costs are being offset each year. Rental Property Depreciation Amount The calculator's purpose is to calculate an output which is the rental property depreciation amount. This is the amount of rental property depreciation per year to deduct from your taxable income. The rental property depreciation calculator also shows the amount of rental property depreciation during the property’s useful life. As we previously mentioned, this information is also shown in an easy-to-read graph. Once you have the outputs from the residential rental depreciation calculator, be sure to keep track of this information for use in future tax filings. One of the best ways to keep track of this information is by using real estate account software. Check our list of the Best Real Estate Accounting Software to see which is best for you. Pros and Cons of Using Rental Property Depreciation There are both advantages and disadvantages of using rental property depreciation. One of the main pros of rental property depreciation is that it is a way to offset the expenses of owning and maintaining income-producing property. However, one of the cons is that MACRS depreciation can be complicated and you need to follow the IRS’s depreciation guidelines. “Typically, if your personal tax bracket is 25 percent or above, then depreciation of rental property can be a good thing. This is because the IRS taxes any amount you depreciated over the life of your rental when you sell it. For every dollar you depreciate now, the IRS wants to tax you at a flat rate of 25 percent when you sell. This is commonly referred to as Depreciation Recapture tax.” — Robert Taylor, Owner, Rental Property Depreciation Pros Pros of rental property depreciation include: It’s a major tax savings because it lets you offset the costs of both your property and qualified improvements during a period of time It lets you offset the costs of the normal wear and tear that your property goes through Depreciation may produce a yearly loss which you can deduct against your rental income Rental Property Depreciation Cons Cons of rental property depreciation include: Having to essentially pay back some of the tax savings of depreciation once you sell the property through what is called depreciation recapture Rental property depreciation can be difficult to understand and time-consuming to calculate Not all types of property and improvements qualify for depreciation, so you need to know which ones do; for example, your primary residence doesn’t qualify and neither do property repairs such as fixing one or two broken windows Tax Advantage Alternatives to Using Rental Property Depreciation You’re not required to take rental property depreciation. However, whether you take depreciation or not, once you sell the property you will have to pay depreciation recapture on the property. This is basically a way for the IRS to recover some of the money you received in tax savings once you sell the property. If your property or other asset doesn’t qualify for depreciation or you choose not take it, there are alternatives: Rental property tax deductions: The IRS allows tax deductions on all legitimate expenses related to running a rental property; these expenses can be deducted yearly, unlike depreciation; for example, you can deduct money you spent on fixing a leak or patching a roof 1031 exchange: A 1031 exchange helps investor defer capital gains tax by selling your investment property and rolling your capital gains (profits) over into purchasing a new like-kind property “1031 Exchanges are a great way to delay paying tax on the profits made when selling a rental property. With a 1031 Exchange, you can ‘roll’ your profits into a new property and avoid paying tax on the sale. Be sure to contact a CPA [certified public accountant] who is knowledgeable in real estate. He or she can help you navigate the ins and outs of a 1031 as well as depreciation and deductions.” — Kevin Ortner, CEO, Renters Warehouse If you’re interested in doing a 1031 exchange and need a company to help you complete the exchange, check out our guide to the best 1031 exchange companies. The Bottom Line Residential rental property depreciation is a complex subject, and the calculations around depreciation can be confusing. Our free rental property depreciation calculator can do the calculations for you based off of the data you input. It will calculate the depreciation amount of your rental property each year and during the use life of the asset you’re depreciating.