As a self-employed realtor, you face some unique challenges when tax-season comes knocking at your door. Since you don’t have taxes withheld from a regular paycheck, it’s up to you to lessen your tax burden by identifying all of the deductible expenses you incur throughout the year.
But here’s the good news: there’s probably more you can deduct than you realize! By making a careful assessment of your business, not just your properties, you can hold onto more of your hard earned cash at tax time.
- Mileage & Auto Expenses
You likely spend a lot of time behind the wheel getting to appointments, taking clients to see new properties, and staging homes. Depending on how much you drive, either the standard or actual cost deduction could save you more. Don’t forget to also include car maintenance like new tires, tune ups, and even car washes!
- Office Space
Whether you pay desk fees under another agent or work from a home office, the IRS allows you to deduct the cost (or a percentage of) your office space. Just remember, you can only deduct one or the other – whichever is greater.
Business cards, website maintenance, mailers – any method you use to get your name out there is deductible as a business expense. Did you have a new logo designed or purchase a mailing list? Those are included, too.
- Supplies & Equipment
Think of all the tools you use to run your business: a nice camera to photograph properties, your computer, lockboxes, and staging decor. Did you buy a new vacuum to clean up that “fixer upper” you were showing? Work-related cleaning supplies are also deductible!
- Licenses & Fees
MLS, brokerage, and legal fees — to name just a few — are all deductible. And don’t forget about your state license renewal. You can even deduct professional membership fees — just remember that any portion of dues designated for lobbying or political advocacy is not deductible.
- Meals & Entertainment
Do you take clients out for lunch after a morning of showing properties? Meet up with a prospective business partner for happy hour? Cater an open house? If you discussed business before, during, or after the meal, it can be deducted on your tax return.
- Professional Development
Hopefully you are always on the lookout for ways to expand your learning and stay on top of industry trends. Any trade events, books, or publications you subscribe to can also be deducted.
A tax professional and bookkeeper you trust can help make tracking all of your business expenses a whole lot easier, so you can spend more time selling and less time fretting. Just don’t forget to deduct their fees, too!