All You Need To Know About Tax Deductions for Real Estate Agents

Ines Zemelman, EA
Ines Zemelman, EA
• 13.05.22 • 5 mins read
All You Need To Know About Tax Deductions for Real Estate Agents

Time and energy are often limited for self-employed real estate agents in charge of their own income. Although taxpayers must not file later, the IRS recommends they shouldn't file prematurely either. There is a danger of making a mistake that might delay the filing of your tax return if you file before you have all the necessary paperwork.

We've compiled a list of tax breaks you shouldn't miss to get you started on your planning. Many activities, from revenues to home expenditures, could lower the amount payable to the IRS. This post deals extensively with the tax deduction for real estate agents.

Most Common Write-offs for Real Estate Agents

Here are some of the important tax write-offs for real estate agents that you should keep in mind.

1. Commissions Paid 

Paying other agents or workers who operate under and/or with you in the rental property business is one of the key tax write-offs for real estate agents. The amount paid to others can be deducted in full from your business's income. Because commissions can mount up rapidly, you shouldn't neglect this reduction.

2. Home Office Deduction

If you work from home, you can claim the home office expense – unless you are presently deducting the cost of a desk.  There are two ways to claim a home office tax deduction: the standard method and the simple method. The simple method is preferred by most self-employed individuals since it optimizes their tax deductions.

However, keep in mind that your work area must be used on a routine basis and just for business purposes. As a result, items like your mattress, kitchen table, and porch swing aren't eligible for tax deductions for real estate agents.

3. Desk Fees

Desk fees are tax-deductible, regardless of whether you use a national corporation or an independent dealer to hang your license. You can, however, use this write-off for real estate agents and claim a deduction with your home office if you're taking a deduction for trading desk costs.

4. Marketing and Advertising Expenditure

The prices of digital and online ads are gradually rising to the top of the budget. The IRS allows businesses to deduct advertising costs such as promotional materials, staging, photographing, and signs. Since it has such a wide scope, this is one of the top tax deductions for real estate agents.

5. Standard Auto

Showings, listing presentations, as well as other activities can add up quickly in terms of mileage. Every business mile that you drive could be subtracted from your taxes if you use the usual vehicle deduction. The standard mileage deduction will likely be one of the largest write-offs for real estate agents if you commute more than 10,000 miles a year for a real estate business. The standard mileage charge was $0.56 per mile in 2021. In some cases, the actual cost technique may offer a bigger deduction if you're a low-mileage driver or have hefty car payments.

6. Office Supplies and Accessories 

Any other office-related expenses, such as stationery and photocopies and the cost of running your business, can be deducted regardless of whether you pay a desk charge or use a home office. It's also possible to depreciate items like furniture, fax machines, copy machines, computers, and even your phone bill over time.

You can completely write off the cost of a business landline telephone if you really have one.

7. Meals

Traveling for business as well as dining with customers or other experts for the purpose of performing business or generating referrals are the only two scenarios in which meals could be deducted as business expenses. Meals delivered by a restaurant are deducted in full for 2022 tax years as part of a COVID-19 relief plan. Since real estate agents meet their business partners, it is one of the write-offs for real estate agents that can benefit you greatly.

8. Licenses, Fees, Memberships, and Insurance

Annual fees are a regular business expense that can be written off as a business expense. Real estate license renewal, professional memberships, as well as MLS dues all fall under this category and are important write-offs for real estate agents to reduce the tax burden. It is crucial, however, to keep in mind that the part of your professional fees devoted to lobbying and diplomatic advocacy is not tax-deductible.

The cost of general business insurance, as well as the cost of errors and omissions insurance, is fully deductible as a company expense. 

9. Tools for the Workplace

Including subscription services for lead creation, such as (CRM) system, is entirely deductible. It is possible to deduct the cost of products that allow you to keep track of your spending and miles.

10. Health Care Coverage

As long as both you and your mate are not qualified for an employer-sponsored healthcare plan, your family's health care premiums could be deductible. In addition to health care and dental coverage, this also provides long-term care insurance.

Last but not least, you should constantly remember that your real estate business expenditures must be directly tied to your business. Check IRS Publication 535 for a comprehensive list of tax deductions, particularly what you may use as tax deductions for real estate agents, and as always, seek the advice of your own legal advisor and double-check any material to ensure its accuracy.

11. Education and Training

Keeping up with the latest developments in your field is essential in today's fast-paced business environment. Are you taking professional development classes to expand your knowledge and reach your full potential? Registration fees, supplies, and travel expenses may be eligible for a tax write-off for real estate agents.

There are several requirements:

  • The training and education cannot qualify you for a different trade or business.
  • The training cannot be for the purpose of meeting minimum educational requirements.
  • The training course(s) must maintain or improve the skill related to your field of real estate.


That's all there is to it! TFX's list of real estate agent tax deductions is intended to help you save money on taxes from the previous year and provide guidance on saving money on taxes in the future.