As a real estate professional, you’re likely used to juggling lots of data. But when it comes to tax time, you’d be surprised to know there are many deductions you may be overlooking. Brush up on the following information to maximize your deductions and save big on expenses.
From online ads to business cards, websites, flyers, signs, and even commercials, successful real estate agents are well versed in the gamut of marketing material. But how do you deduct these marketing expenses? The great news is that all marketing fees, even writing and design hire-outs, are deductible. From the agency that designed your website to the copy-editor who proofreads your print material, you can deduct these costs annually.
If you’re traveling for a real estate event you will likely be able to deduct your transportation and accommodation costs.
It may seem strange to deduct entertainment and food from your taxes, but it’s pretty typical, especially if you spend many lunches schmoozing potential clients or chatting best practices with colleagues. Whether you’re traveling or catering to clients in your hometown arena, you can deduct 50 percent of your total expense, which includes tax and tip for the meal. If you threw an open house, you can deduct 100 percent of your spend on food and refreshments.
If you drive 10,000 miles or more annually for your real estate business, you’ll get the biggest tax break if you take the standard mileage deduction, versus tracking every single auto-related expense. In order to take the standard mileage deduction, you will need to keep a detailed log of your driving, including the date and time of your trip, as well as the exact mileage.
If you pay a desk fee at your office or brokerage, then you can write this fee off. It’s important to note that if you’re deducting a home office, you can’t also deduct your brokerage desk fee. It may seem unfair if you work both at home and at an office, so crunch some numbers to determine which education will yield a bigger benefit.
Staples, printer ink, photocopies, postage, oh my. It may seem like you’re endlessly shelling out bucks for office supplies. These are tax deductible—as long as you save your receipts. Other office supplies that are deductible are big ticket items like printers, scanners, and computers used for work-only. You can also deduct your office phone line or the portion of your cell phone that you use for work.
As a real estate professional, your state license renewal, professional memberships, and MLS dues are all tax deductible. Business insurance, E&O insurance and any real estate taxes necessary for your business are also fully deductible. The only membership fees not deductible are those attributed to lobbying or political advocacy. Click here for more information on what is deductible.
From lead-generation tools to CRM software, the majority of your business tools are tax deductible.
Do you have a home office? You can write it off. You don’t need to have a whole room dedicated to your work—even a nook carved out of the family room or spare bedroom count toward that home-office write off. There are two options when writing off your home office. Many self-employed agents opt for the simplified method in order to make the most of their deduction, but if your home office is huge (think that refinished basement), or you live in an extremely costly area, the “regular” method of tracking your actual expenses may bring more bang to your deduction bucks. You can learn more about each approach here.
As the industry shifts, successful real estate professionals need to stay on top of their education to remain relevant. In many states, continuing education is a requirement for real estate professionals. Whether you’re attending classes, conferences or trade shows, or shelling out for coaching, track these expenses and deduct them at tax time.