17 Tax Deductions Real Estate Agents Need to Know
You work hard for your money, and you want to keep as much of it as you can. There’s one important area that when overlooked can cost you thousands of dollars that would otherwise end up in your pocket.
What is it? Taxes.
Thankfully, when you’re familiar with the tax code, there are tons of tax deductions available for real estate agents that can help you keep more in your wallet.
In this article, we’re going to break down 17 tax deductions for real estate agents that could save you thousands. Keep in mind, we’re not tax experts, so please consult with your tax attorney or CPA to determine which deductions you’re eligible for.
Tax Deductions for Real Estate Agents
1. Licensing fees
Most professions have licensing and professional fees, and real estate is no exception. Real estate license renewal fees, MLS dues, and any fees for professional memberships you belong to are tax-deductible. Any portion of those dues used for lobbying or political endorsement is not deductible.
2. Education and training
Want to stay on top of the real estate game by investing in ongoing training and education? Education and training is also a tax deduction. Sell It Like Serhant has top-notch online courses on:
- Setting up your real estate business in Sell It Like Serhant
- Running social media ads in the Social Ads Course
- Navigating challenging markets in How To Win in a Low Inventory Market
- And building an unshakeable personal brand in the Ultimate Personal Brand Course for Real Estate Agents
3. Property marketing
Marketing expenses such as signage, staging, online ads, brochures, photography, and any other marketing tools you use while operating your real estate business are tax-deductible.
4. Commissions paid to other agents
Are you aware that commissions paid to your agents or other employees are usually deductible? They are considered a business expense and can be a huge deduction!
5. Desk fees
If you are an independent broker or are under a national franchise, your desk fees are deductible. Just beware that if you are taking a deduction for brokerage desk fees, you won’t be allowed to deduct any home office expenses.
6. Business insurance, E&O and health insurance
Your general business insurance, Errors and omissions insurance, and your health insurance are all tax deductible.
7. Marketing and productivity software
Everything adds up, so don’t overlook this one! Your CRM (customer relationship management) platform and any other software used for running your business or automating your marketing is a tax deduction.
8. Office supplies
Even if you claim deductions for desk fees or a home office, you can still claim office-related expenses. Expenses like office furniture, equipment, and office supplies like photocopies and stationery are tax deductible.
9. Telephone and phone bill
If you have a designated business phone, then the device and related phone bills are allowed as deductions.
10. Transportation expenses
Real estate agents put in a lot of miles. Fortunately, you can write off car rentals, air travel, and train tickets.
11. Gas, maintenance, insurance, parking, depreciation, etc.
Using the standard auto deduction, you can deduct every business-related mile driven, and that can benefit you if you drive 10,000 business-related miles annually.
If your business-related miles are low, you will benefit more by tracking and using car expense deductions such as gas, car maintenance, car insurance and registration, parking fees, tolls paid, and vehicle depreciation.
12. Home office related bills
Don’t forget to claim your home office expenses, even if you work just part-time from home. You don’t have to have an entire room dedicated as your office to claim office expenses as a deduction. Just a dedicated desk will suffice.
Examples of home office deductions include office furniture and supplies and your WiFi bill. A portion of your property insurance and a portion of your electric and water bills can also be counted as deductions.
13. Services and fees
Running a business requires a number of service-based subscriptions and fees. Your bank fees, business licenses, tax preparation, and app subscriptions are just some of the services and fees that are real estate tax deductions.
14. Work-related meals
If your conversation during a meal is work-related, your meal is considered tax-deductible. Even if you are just building a business relationship and not paying for the other person’s meal, you can use this as a deduction.
15. Travel-related fees
Don’t forget to save your receipts when you’re traveling for business. You can deduct fees for WiFi and communications, baggage fees, Uber and taxi fees, car rental, shipping expenses, and dry cleaning.
Hotels, motels, and Airbnb stays are tax deductible when you’re traveling for business. You can even deduct any reimbursements you give if you stay with a friend.
17. Gifts for clients
Client gifts are tax-deductible up to $25, and you must have records proving the amount and that it was business-related.
18. Appraisal fees and closing attorney fees
Closing attorney fees and appraisal fees are considered to be legitimate business expenses necessary for the operation of your real estate business. They are tax-deductible.
Why you should use a CPA
These are just some of the tax deductions that can benefit you as a real estate agent. Tax law can be very complex, and regulations are constantly changing in the real estate industry. Make sure you follow the advice of a certified public accountant (CPA) when it comes to tax deductions.
If you don’t have a CPA, it’s important to find one who is aware of all changing regulations and can guide you financially. They are experts in the area of tax liabilities and deductibles and will help you take advantage of the tax deductions you’re eligible for.