Tax Deductibles for Real Estate Agents

11 Nov 2019 Posted at 10:00h by Amir 0 Comments

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Real estate is probably one of the costliest businesses in the sense that there are so many fees and dues to be paid. MLS dues, Real estate association fees, office costs and others to name but a few. 

This is why it is vital for a real estate professional to find out ways to limit their costs. One of these usually overlooked ways is tax deductible. 

Here are a few tax deductibles every agent or realtor should know about and take advantage of:

Agents and General Business Deductions

As a real estate agent, you are liable to benefit from some tax reductions. You should know that your tax will be defined by tax brackets offered by the IRS every year in November or December. 

Here are some general tax deductibles:

• • Licenses and MLS fees/Dues
  • Marketing costs
  • E&O and Insurance
  • Desk fees
  • Paid commissions
  • Education and training

Agents On The Road

If you are an active agent, there is a lot of commuting between leads and properties. But don’t worry, if you’re driving your own vehicle, you can count on the following tax write-offs:

• • • Gas
    • Vehicle depreciation
    • Maintenance
    • Parking and tolls
    • Insurance and registration
    • Buying a new car

Depending on your local regulations, a portion of these will be deducted. 

Agents at the Office 

In order to stay in the game, agents and realtors often need a fancy office. That fancy office may even need to be situated in a fancy neighborhood. Agents in downtown Manhattan or Los Angeles will probably relate to this the most. 

This is where any tax bill write-offs counts. Let’s take a look at tax deductibles around the office:

• • • Office supplies
    • Cellphones and tablets used for business
    • Virtual assistants and bookkeepers
    • Office rents
    • Internet and phones costs
    • Softwares and application 

This is an area where agents can save a lot depending on the year and size of their businesses.

Agents Working From Home 

Given the costs of running an office and changes in working styles, more and more agents are opting to work from home. This is a trend promoted by so many authorities too, especially in crowded cities. 

Although you don’t have the cost of an office, working from home still brings its own costs. Here are some cuts you can make off your tax return:

• • • Utility bill ( Gas, water and Power)
    • Wifi Bill
    • Rental 
    • Property insurance

Deductible portion of these costs will depend on your estate and your location. Just like the value of your property, taxes will be decided based on your neighborhood and the fact that you are in or outside of the city.

Interested in working from home? then check this out:

Can Real Estate Agents Work from Home?

Things to remember

Despite all the benefits we have as real estate agents, tax can become a huge challenge and can ruin your business. Here are a few things to remember before signing your taxes:

• • • • • Never cheat. It might sound tempting when you save through avoiding taxes but it can cost you your business. Tax fraud is a felony and you may go to jain for up to 4 years or be fined hundreds of dollars.
        • Consult a CPA or tax professional. There are a lot of people who claim to be an expert in taxes and had experience benefiting from it, but that’s not for you. The consequences of mistakes in tax returns are irredeemable
        • Document everything. All the money that goes in and out of your business must be documented. In case something goes wrong with your claims, you have a chance to defend yourself.

Tax deductibles can help save hundreds of dollars and make real estate business more efficient. Once you know about these possible savings and consider them in your financial records, it will be time to learn about other fees and dues in your state and multiple listing service. For this and more, please make sure you read these next: