Real estate agents can leverage tax deductions on business expenses to save significantly at tax time, effectively reducing taxable income and recouping business costs. Explore key tax deductions for realtors below.
Keep track of all your business-related trips. While there are lots of ways to do this (like taking odometer readings before and after trips), the easiest way is to use an app that records mileage while you drive.
The IRS scrutinizes this deduction closely. Ensure you only claim your home office if it's a dedicated space used exclusively and consistently for your real estate activities. For a home office, you have the option to deduct it using either:
If your broker charges you a desk fee, you can deduct the cost as a business expense.
If you subscribe to any online tools for your real estate business, be sure to keep your receipts — these expenses are deductible.
Do you use your phone exclusively for business? You can fully deduct related expenses (including the phone purchase and monthly bills). If you also use your phone for personal reasons, you should only deduct the portion used for business. The best way to do this is to calculate what percentage of your calls were work-related and then claim that percentage of your bill.
Designing and printing business cards is a deductible marketing expense.
Keep your receipt anytime you print or copy work-related materials like marketing flyers, brochures, and office records. Print jobs are deductible.
Items that you buy for everyday office use, like pens, paper, postage, and notepads, are all deductible. Good news: You can still write these off even if you take the simplified home office deduction.
When you invest in promoting your business, keep track of how much you spend. Online ads, signs, print ads, radio ads, postcards, and more are all deductible.
Do you give away goodies like branded pens and stress balls to promote your business? You can deduct these, too.
Anytime you have to pay for parking while you’re working, save your receipts; these expenses are deductible. Unfortunately, this doesn’t apply to parking tickets or traffic violations, so drive safely.
Any toll fees you pay while working are tax deductible as long as they’re not already being reimbursed.
When you invest in networking and educational opportunities like conferences, seminars, and professional events, you can deduct related sign-up fees and reading materials. You can even deduct travel and lodging expenses if you travel to a convention or conference. Meals are deductible when you’re away for business, but only up to 50 percent.
You can deduct any license renewal fees or membership dues to professional organizations (like the National Association of Realtors) that help you do your job. The portion of your dues that goes to political lobbying is not deductible.
If you send gifts to your clients after closing a deal, you can write off the expense up to $25 per client.
As long as you don’t get health insurance via a spouse or employer, you can deduct 100 percent of monthly premiums you pay. Keep in mind that if you receive a government subsidy, you can only write off the amount you pay each month (not the original price of your plan).
The IRS deems some common expenses as non-deductible. These include:
