9 Tax Deductions Real Estate Agents Can’t Afford to Miss


As a real estate agent, filing taxes is complicated as an independent business owner. However, the good news is that many of your expenses may be tax deductible, reducing the amount of tax you owe.

The IRS allows you to deduct “ordinary and necessary” costs for your business, so it’s essential to understand and track them throughout the year. Now that last year’s tax season is over, it’s time to get ahead for 2022.

Here are nine deductible expenses realtors can’t afford to miss.

1. Marketing . Marketing and advertising costs can add up quickly when you’re a real estate professional. They can include business cards, yard signs, flyers, direct mail, website maintenance, personal magazines, and online advertising.

2. Vehicles. Real estate professionals are constantly showing properties and meeting clients. So your transportation expenses can be significant. Fortunately, you can deduct business use of your vehicle using one of the following methods:

  • the standard mileage method requires you to track your business mileage for the year and multiply it by 58.5 cents to calculate your deduction. It’s usually better when you’re driving an economy vehicle.
  • the actual expenditure method requires you to track your business mileage and expenses, such as maintenance, repairs, insurance, gas, insurance, lease payments, auto loan interest, and depreciation. The percentage of business use determines the deductible part of these expenses. Although it is more difficult to keep pace, the current method may give you a larger deduction than the standard mileage method.

3. Professional fees. All fees for professional services necessary to run your real estate business, such as a lawyer and accountant, are deductible for tax purposes. In addition, if you use accounting software, this entitles you to a tax deduction.

4. Education. Training expenses you incur to improve your real estate skills or maintain your professional license, such as online real estate training, are fully tax deductible. They also include subscriptions to trade publications, seminars and books related to your field.

5. Meal. If you invite clients or colleagues to dinner to discuss business, you can usually deduct 50% of your bill. However, due to the pandemic, there is a temporary 100% deduction for business meals provided by a restaurant until the end of 2022.

6. Travel. If you have to travel overnight for your real estate business, your airfare, hotel, ground transportation, tips, dry cleaning and meals are tax deductible. However, if it turns into a personal vacation, you can only deduct the business portion of your trip.

7. Office expenses. Realtors can also deduct the cost of various office expenses, including rent, furniture, utilities, computer hardware, software, printers, supplies, and shipping on your taxes.

8. Assurance. Any business insurance, such as errors and omissions (E&O), professional liability, or business interruption, purchased for your real estate business is deductible. Your personal auto insurance may also be partially deductible if you use it for business purposes.

9. Home office. If you regularly operate your real estate business from an area separate from your home, you may be able to claim a home office deduction, even if it’s just administrative work, such as accounting and cleaning. planning. Home office expenses, such as furnishings, flooring, or wall painting, are fully tax deductible.

Also, office-related costs that affect your entire home, such as homeowners or renters insurance, utilities, maintenance, mortgage interest, and property taxes are partially deductible. You can calculate the deduction using one of the following methods:

  • The Standard Method requires you to keep good records and calculate the percentage of your home used for business purposes. For example, if your home office is 12 feet by 10 feet, that’s 120 square feet. If your whole house is 1,200 square feet, diving 120 by 1,200 gives you home office space that’s 10% of your house.
    In this example, 10% of your eligible expenses could be attributed to business use, and the remaining 90% would be for personal use. If your monthly electric bill is $100 and 10% of your home qualifies for business use, you can consider $10 of the bill a business expense.
  • The simplified method does not require you to keep records, but gives you $5 per square foot of office space, up to a maximum of 300 square feet. So that caps your deduction at $1,500 (300 square feet x $5) per year.

Whichever method you choose to calculate a home office tax deduction, you cannot deduct more than the net income of your business. However, you can carry them forward to future tax years.

If you have questions about qualifying business expenses, home office expenses, or taxes, consult with a qualified tax accountant to maximize all possible deductions for your real estate business.

Laura Adams is a writer and host of the Money Girl podcast.

This column does not necessarily reflect the opinion of the editorial department of RealTrends and its owners.

To contact the author of this story:
Laura Adams at laura@lauradadams.com

To contact the editor responsible for this story:
Tracey Velt at tracey@hwmedia.com


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