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6 Tax Deduction Tips For Real Estate Agent

17 December 2018

Tax season is arriving! If you are in the real estate business and manage your finances on your own, it is tough to find time to get expenses recorded in a timely manner. Hence, many real estate agents prefer to hire an in-house accountant or outsource accounting firm so that they can keep accurate financial records all the time. 

It helps them to know the real financial value of the business and all the accounts payable and receivable.  These financial reports help them to deal with the tax season so they can avoid the tax penalty.

Tax deduction tips for every real estate agent whether you are doing your taxes on your own or hiring an accounting firm.

1. Don’t forget your vehicle mileage

You spend your high amount of money on driving between properties and appointments. You can deduct your mileage cost as business expenses. According to the Internal Revenue Service, a vehicle can be claimed either as IRS standard mileage rate or actual cost.

Standard mileage rate includes business-related trips and all the parking & toll charges. Hence, actual expense includes vehicle maintenance and repairs such as tire replacement, oil changes, licenses, etc. 

2. Home office deduction

If you are using a particular area of your home for business work, you are eligible for a home office deduction. It is just like a vehicle deduction that offers the regular method & simplified options. 

If you are living in a high-cost area and have a large home office, it will help you to maximize deductions. Hence, with the regular method, you can track actual expenses.

3. Record advertising and marketing costs

Most of the real estate agents invest highly on advertising and marketing for business growth. They spend a lot of money on business cards, flyers, and ads. Do you know the promotion cost is also deductible? Yes, it is deductible whether it is writing or designing fees for business’s advertising.

Online advertising is becoming a vast area of spending. It includes website expenses, search engine marketing, pay per click advertising and video production, etc.


4. Real estate software & apps cost

If you use software to record and track your expenses such as CRM (customer relationship management), QuickBooks, etc., all these are fully deductible.

5. Insurance

The insurance, which you bought for your business (business liability insurance or insurance for a business property) is deductible. If you are running a home office, the portion of your homeowner insurance is also deductible.

6Office equipment & supplies

No matter that you already taking home-office deductions, still, you can claim other office-related expenses, which include computers, telephone & bills, furniture, stationery, etc.

If you are using a landline telephone for business, this expense is also deductible. But if you are using mobile, you can deduct business percentage of that expense only.