Tax Write-Offs for Realtor Expenses

Real estate agents have numerous tax write-offs in regards to running a business. It is very important for agents to keep a record of expenses in order to minimize any tax liability. The more tax deductions agents have, the less they owe to the government. To get the most out of their allowable deductions, real estate agents should consider hiring a certified public accountant to help them with their taxes and expenses.

  1. Office Space and Equipment

    • Calculate the square footage of the home office to determine what percentage of the total square footage of your home is used for office space. Include areas set aside for business machine usage and storage space. You will use that percentage to determine what portion of the costs of maintaining your home will be deductible like utilities, cleaning services and even costs like trash collection and landscaping. Everything used to maintain your office can also be deducted including furnishings, lamps and office supplies. Keeping track of all the receipts for these expenses will determine the total deductable cost for the office.


    • Record automobile expenses. Miles driven around town for personal use do not count, but all miles driven for work are deductible. The IRS provides a mileage allowance that changes from year to year that you multiply by your total business miles to determine your deduction. For example, during the 2011 tax year, you will be able to deduct $.51 per business mile. Alternately, if you use your vehicle exclusively for business, you can deduct the actual cost of using a business vehicle per year. In this case you would keep all receipts for gas as well as repairs and maintenance. If you are taking the mileage allowance you will need to keep a log of your business miles.

    Entertainment & Travel

    • Keep your entertainment receipts. Realtors can write off 50% of meals at restaurants or any event as long as business is discussed. Even long distance travel can be deducted as a business expense on the condition that business is being discussed and detailed receipts and itenararies are kept (actual expense method). Entertainment may be included, but special rules apply to "lavish spending" so you need to keep this in mind. The Internal Revenue Service provides an alternate method in Publication 1542 for calculating per diem costs rather than actual costs.

    Education, Dues and Subscriptions

    • Keep records of all classes and license upkeep. Having a real estate license means staying up-to-date on education and laws, contracts and more.The costs of these courses can be deductible. Association membership dues like the National Association of Realtors (NAR) as well as local and state associations are deductible as are subscriptions to professional journals and magazines.

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