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Top 10 Tax Deductions for Real Estate Agents

Posted by Larry White on January 27, 2017 at 3:15 PM

Tax season has officially arrived, and if you aren’t already thinking about what your 2016 tax burden is going to look like, you should probably plan on starting sooner rather than later!

If you’re anything like most real estate agents, you have a very complicated list of tax responsibilities for your accountant to sort out. But luckily, you are also likely to have plenty of tax deductions that can help to lighten that burden.

Tax Deductions for Real Estate Agents.jpgIn order to help you start pulling together all of the receipts and documentation you are going to need to maximize all of the write-offs that are available to you, we have put together a top ten list of the very best tax deductions that every real estate agent should be taking advantage of.

10. Software Expenses

One of the most commonly overlooked deductions is the price you paid for any software that you have purchased to improve your business over the past year. This could include your client database solution, IDX program, photo editing software, or even the simple spreadsheet program you use to keep track of your current listings.

9. Continuing Education

If you have taken any courses as part of a continuing education program over the past year, the costs associated with those classes can be deducted as well. This might also include any classes outside of the ones required for continuing education if they help you improve as an agent.

8. Licenses, Fees, and Dues

You should also be keeping track of any and all expenses related to your real estate license, and fees for licenses that are required to conduct business in your community. You might also be able to deduct any dues that were paid for membership to groups like your board of REALTORS® or your local chamber of commerce.

7. Desk Fees

Any desk fees that you have to pay to your broker can also be viewed as a necessary business expense. Keep detailed records of how much you are required to pay in desk fees and when those payments were made in order to maximize your deduction for those payments.

6. Home Office Deduction

In addition to your actual office, you could also take a pretty significant deduction for all of the expenses that are required to keep your home office running smoothly. This might even include portions of your home electric, gas, internet, and cable bills.

Home office deductions are a tricky area of tax law though, so be sure to check with your CPA or tax professional to ensure you stay on the right side of the regulations.

5. Office Supplies

Speaking of desk fees and your home office, you should also be keeping track of any office supplies that you purchase personally to be used for business either at your home or the office. This is one of those deductions that is easy to forget about in the moment, but if you are diligent about saving your receipts, you could be looking at a pretty significant write-off.

4. Professional Services

It’s probably obvious that you can write off the services of any professionals like lawyers or accountants that you work with over the year, but these deductions can also apply to other professional services like a photographer you might hire to take photos of your listings.

Always keep detailed notes about other professionals you work with so that you can refer back to them at the end of the year.

3. Meals and Entertainment

Real estate agents find themselves eating meals with clients all the time, and each and every one of those meals is yet another tax deduction. Once again, as long as you are diligent about keeping notes regarding your expenses, you can really rack up some significant write-offs.

2. Advertising Expenses

Another significant expense that you might not be keeping detailed notes on is all of the money you spend to advertise and market yourself as an agent. This could range from direct mail, money spent on online marketing, business cards, and even those promotional calendars that you hand out to clients.

1. Vehicle Mileage

Last but not least, every single mile that you drive as a real estate agent qualifies for a tax deduction. Using one of the many apps that are available on the market, make sure that you keep accurate notes of your work mileage and you will be pleasantly surprised at the resulting write-off.

While all of these tax deductions can contribute to a much lower tax burden than you might have been originally looking at, it is important to remember that you should always consult with an expert who has experience filing tax returns on behalf of real estate agents. With a licensed expert in your corner, all you have to do is sit back and enjoy counting your deductions!

Topics: Agent Resources

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