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Real Estate Agent Tax Write Offs

Real estate agent tax write offs are an important part of building a successful business. When claiming a tax deduction remember that it is not what you think it is what the IRS will allow. The IRS has a specific set of rules that they follow to determine if your tax deduction. Of course, just like how every home has its distinct features some tax deductions require more proof than others. Here is a list of common real estate agent tax write offs:

  • Marketing Expenses: Business cards, website fees, MLS dues, lead generating expenses, posters, signs, sponsorships, commercials, advertising, pretty much anything you do to get someone to call YOU when they want to buy or sell a house. You need to document what things you used for what purpose. A marketing or business plan may help you keep things organized. This does not have to be very complicated. A word document that shows the expenses for general marketing (to build your image) and one for specific houses or events is all that is needed. As an aside, please remember to back up all computer files.
  • Training, Education and Licensing: Whatever you pay to maintain your ability to be an agent is deductible, as well as things you do to increase your skills, as well as what you are allowed to do in the field. Classes, seminars, books and certificates mostly all qualify.
  • Insurance: Professional liability insurance (sometimes called errors and omissions insurance) may keep you out of hot water with a client. You can’t please everyone all the time. When people sell or buy property they can get emotional and may look to point the finger at the realtor. Why take the risk. Even if your state does not require insurance it makes sense to buy it anyway. Also, if you pay a rider to your car insurance for business use, the difference between that and regular insurance is deductible. There is also a self-employed health insurance deduction that allows you to deduct your health insurance costs if you have no other insurance source (if you can get insurance through your spouse’s work this is a no-go).
  • Cell phones, laptops and tablets: Do yourself a favor, get a business only laptop, cell phone, tablet and/or computer. It is simply too difficult to calculate expenses on a part personal and part business electronic device. Don’t share your business number with friends and family (other than wife and kids). If you keep everything separate, the deductions are easy and legitimate. If you don’t, you have to establish a business use percentage, and worry about listed property rules which can complicate your life.