Can a person who helped an investor buy properties get paid from investor? Investor is willing to pay but is this tax-deductible for him?

Asked by Tony Grier, San Jose, CA Sun Oct 23, 2011

I am real-estate specialist (or consultant) in identifying properties which can return a good return - I started helping my brother acquire homes and now this has become my full-time job. I am loving this - My brother will have acquired 6 properties or more by the end of this year and there are a few more of my friends interested in this service.

Now, my brother wants to compensate, because he is making a decent return through rentals. I am wondering if any of you are aware, if he can claim tax benefits on it - as in, is this consulting fee 'tax deductible' for an investor like him. I know I will be approaching a tax consultant however wanted to share / post this on Truilia to get some collective thoughts. Thanks!

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Susan Lehmkuhl’s answer
Susan Lehmku…, Agent, Phoenix, AZ
Thu Dec 29, 2011
You need to be careful that you are not practicing real estate without a license which could cause you to find yourself in hot water with the state!

Susan Lehmkuhl
Associate Broker
The KUHL Team
Buy and Sell Smart Realty
0 votes
Ann Griffin, Agent, Mesa, AZ
Wed Dec 28, 2011
Tony, you need a real estate license. Check with your state Department of Real Estate and look at the requirements. Obviously, once you have your license, your commissions are tax deductible as an expense to your investment buyers. However there are stiff penalties for practicing real estate without a license- don't ignore this!
0 votes
Dan Tabit, Agent, Issaquah, WA
Sun Oct 23, 2011
The question becomes if you do it for others are you practicing Real Estate without a license? Investment Consultants may want to investigate what the State of California considers valid consultation that does not require a license and where one becomes necessary. I suspect that once you do this for a non-family member for money, you may be violating the licensing requirements, but check out the website to the California Department of Real Estate I've attached below and consider getting your license. You may find more ways to do what you do full time.
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Tina Lam, Agent, San Jose, CA
Sun Oct 23, 2011
I don't think it's all that complicated. If your brother is paying you, then that's an expense that lowers his taxable profits. That in itself is the tax benefit to your brother.
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