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Real Estate Agent Tax Deductions

Real estate agent tax deductions can increase your bottom line. You’ve worked hard getting clients and selling properties all year. You also know how important it is to prepare a home for a successful showing. Tax preparation can help you preserve your gains. Many people, even sophisticated real estate professionals, don’t fully appreciate just how much money they can save with tax deductions. To understand the full value of your deductions, you must add up your total savings in federal and state taxes, and self-employment taxes. Just like projections for your sales each year your tax projections can help you take your career to the next level.

Checklist of common expenses for real estate agents and brokers

  • computers;
  • professional dues and fees — for example, multiple listing service dues and dues paid to the local Chamber of Commerce, Realtor associations, and real estate license renewal fees;
  • advertising expenses, including websites, mailing lists, newspaper advertising, fliers, online advertising, postcards, promotional materials, logo clothing, and anything else you pay for to market your real estate business;
  • real estate franchise fees;
  • bookkeeping, accounting and legal fees;
  • home office expenses (if you qualify);
  • cell phones;
  • computer software;
  • Internet access fees;
  • business gifts (up to $25);
  • business meals and entertainment (only 50 percent deductible);
  • cab fares for business travel;
  • car and truck expenses, including business mileage, depreciation, insurance, interest on car loans, lease payments, license plate fees, parking expenses, and tolls;
  • desk fees;
  • education to maintain or improve required skills (but not courses you take to pass the real estate licensing exam);
  • insurance, including health insurance, errors and omissions insurance, business liability insurance, and business equipment insurance;
  • interest, such as interest for business loans, interest paid on business credit cards;
  • map books;
  • office equipment (cost may be deducted in one year using bonus depreciation or IRC Section 179);
  • office expenses, including rent, cleaning and maintenance, and utilities;
  • office supplies;
  • postage;
  • referral fees and commission rebates;
  • retirement plan contributions;
  • subscriptions to professional journals;
  • taxes, including payroll taxes for employees, state and local business taxes;
  • telephone service fees;
  • travel to business conventions, including transportation, lodging and food;
  • wages and benefits paid to employees

Real Estate Agent Tax Tip

Whether you claim a home office deduction or not, it is a good idea to take a photo of your home office at the beginning of each tax year. If you do not have a camera with a date stamp write the date on the back of the photo and put it in your tax folder. The IRS audits a fair amount of self employed individuals. If you get audited, you don’t want the IRS agent trying to go to your house. If you have a picture of your office you may forestall that visit.

 

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