Real Estate Agent Tax Deductions: What You Can (and Can’t) Write Off

As a real estate agent, you’re typically considered self-employed for tax purposes. Being able to claim deductions can lower your tax burden, but it’s important to know what you can and cannot write off. At Kentuckiana Real Estate Academy, we offer pre-licensure courses to prepare you for the licensure exam. Continue reading to learn about the deductions you can take as a real estate agent.

What Are Some Tax Write-Offs for Real Estate Agents?

When it comes to filing taxes, real estate agents are considered independent contractors, or self-employed, even when affiliated with a real estate agency. This comes with several benefits, like the flexibility to set your own hours and determine how much you make.

On the flip side, you pay out of pocket for certain things, but many of them are tax-deductible, which lowers your overall income. This lowers your self-employment, state, local, and federal tax payments.

Let’s take a closer look at some real estate agent tax deductions:

• Professional Membership Fees, like dues for professional organizations, including the National Association of Realtors®.
• Insurance, including health insurance, car insurance, and professional liability insurance.
• Commissions Paid to Others, including costs split between other agents and anyone else you pay.
• Home Office and Utility Expenses, taken as a percentage of household costs.
• Office Supplies and equipment, like printers, pens, and paper.
• Rental Office Space, including desk fees if you’re part of an agency.
• Vehicle Expenses, such as mileage.
• Advertising: Business cards, billboards, radio advertisements, open house signs, websites, and more.
• Professional services: Hiring a bookkeeper, accountant, notary, etc.
• Gifts: Sending gifts after closing, such as a gift basket for the family.
• Meals: You can deduct up to 50% when you’re meeting with clients or traveling.
• Continuing Education: Online or in-person classes that keep your skills fresh.
• Trade Shows and Networking Events: These are 100% deductible
• Phone Bill: Your phone is essential for your business, so you can deduct the portion used for business.

Get into the habit of keeping receipts, storing them, or scanning them immediately.

Realtor Tax Deductions: Things You Can’t Write off

The majority of what you can’t write off are personal expenses. These include things like clothes. You would have to wear clothes anyway, so if it’s something you could wear outside of work, it’s not deductible. Personal phone calls that aren’t business-related aren’t tax-deductible. And if you take your car, which you also use for work, on vacation, that mileage is not tax-deductible.

Entertainment is also not deductible, even if it’s with a client or the agency.

Contact Us for Real Estate Agent Classes

Get organized for the tax year by compiling all of your receipts and tracking your purchases that are deductible so you can get the most out of your tax return. Whether you file on your own, use an accountant, or use an online tool, you know what you can claim and what you can’t. At Kentuckiana Real Estate Academy, we prepare you for your real estate pre-licensure exam. We can also prepare you for a career as a real estate broker.

To learn more or sign up for one of our classes, you can call our Lexington office at (859) 317-4846 or fill out our contact form. We serve the surrounding areas of Louisville and Lexington, KY.