Real Estate Agents/Brokers

Real Estate Agents/Brokers

Real estate agents and brokers are licensed professionals who make a living through commissions from sales. They are self-employed and not considered employees under federal tax guidelines. This self-employed classification allows for the opportunity to lessen many expenses that may be incurred in real estate sales or property management. Accurate documentation and knowledge of appropriate write-offs are fundamental to taking advantage of various tax deductions.


Setting up a basic filing system will help arrange receipts and other various documents, such as checks and credit card statements. Furthermore, maintaining receipts of depreciating assets need to be kept for several years. For example, depreciable properties, business vehicles, office equipment, and office furniture are usually deducted over time rather than expensed immediately.

How does the PATH Act affect Realtors?

The Protecting Americans from Tax Hikes (PATH) Act provides real estate agents and brokers with supplementary relief for business-related purchases followed by changes made to the IRS Section 179 deduction. In 2015, the PATH Act was approved to allow realtors an instant one hundred percent deductions on almost all the capital purchases, which entails greater tax savings.

Allowable tax deductions you need to know as a realtor

Listed below are some common deductions real estate agents and brokers benefit from: 

Marketing and Advertising Expenses:

  • Sales and open house signs and flyers;
  • Website development and maintenance;
  • Business cards and mailers
  • Real estate coaching, training, and educational costs
  • Real estate licensing and renewal fees
  • Real estate association dues, multiple listing service (MLS) dues and brokerage desk fees


Transportation Expenses:

  • Automobile expenses (i.e. maintenance and repairs, gas, mileage, auto insurance, parking, new car purchase or lease costs)
  • Travel expenses such as airfare, lodging, and meals for business purposes


Home Office Expenses: Rent or Own

  • Gifts ($25 deduction limit), entertainment, and other costs
  • Telephone Service (Business)
  • Occupancy (Business) Expense; Depreciation, Rent, Utilities, Interest, Real Estate Taxes, Cleaning and Maintenance, Office Equipment and Furniture and any other business-related expenditures.

The simple rule for any expense to qualify as a deductible is that it must be ordinary, necessary, and exclusively or directly related to the business. IRS Publications 463 and 535 can help decide whether a specific expense could be considered tax deductible.

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