Top Tax Deductions Realtors Need to Know to Maximize Their Write-Offs

Maximize Your Tax Savings: The Ultimate Guide for Realtors

As a realtor, you’re running a business. That means you have the opportunity to claim a variety of tax deductions that can significantly reduce your taxable income and keep more of your hard-earned commission. Here are the top tax deductions every real estate agent should know:

1. Vehicle and Mileage Deductions

If you’re constantly driving to showings, client meetings, and open houses, your vehicle expenses can add up quickly. The IRS allows you to deduct either the standard mileage rate (65.5 cents per mile for 2024) or your actual car expenses (gas, maintenance, insurance, and lease payments). Keep a detailed mileage log using an app to track your business miles.

2. Marketing and Advertising Costs

Every dollar you spend on marketing—social media ads, website development, business cards, and open house signs—can be deducted. This deduction is huge for realtors who spend heavily on personal branding and lead generation.

3. Office Expenses and Home Office Deduction

Whether you rent a dedicated office space or work from a home office, you can write off a portion of your rent or mortgage, utilities, internet, and office supplies. To qualify for the home office deduction, you need a dedicated space used exclusively for business purposes.

4. Professional Services and Continuing Education

Expenses for hiring a CPA, legal advice, and business coaching are fully deductible. Additionally, fees for licensing, certifications, and real estate courses are great write-offs. Investing in your education not only enhances your skills but also lowers your tax bill.

5. Client / Employee Business Meals

Client meetings over coffee, lunches, or dinners can be deductible. Remember, you can only deduct 50% of these expenses, and they need to be directly related to your business. Save those receipts and document the purpose of the meeting.

6. Real Estate Tools and Software

From CRM systems to virtual tour software, these tools are essential for running your real estate business efficiently. All costs associated with these business-related apps and software subscriptions are deductible.

7. Commission Splits and Brokerage Fees

Don’t forget that the commission split you pay to your broker and any desk fees or marketing fees charged by your brokerage are deductible. This can be a significant write-off, as it’s often a substantial portion of your income.

8. Travel Expenses

If you’re traveling to attend real estate conferences, network, or meet out-of-town clients, your travel expenses—airfare, hotel, transportation, and meals—are deductible. Keep a record of the business purpose of each trip.

Final Tips:

• Keep detailed records of all your business expenses.
• Use a dedicated business credit card to make tracking easier.
• Work with a tax professional who understands the unique needs of realtors.

Maximizing these deductions can save you thousands of dollars come tax season. Don’t leave money on the table—keep good records and get strategic about your write-offs.