Tax Deductions for Real Estate Agents
As a self-employed real estate agent, you have access to numerous tax deductions. From your vehicle and home office to marketing and staging costs, here's what you can write off.
Common Deductions for Real Estate Agents
Vehicle Expenses
Mileage for client showings, property visits, open houses, and broker meetings. Choose standard mileage (70¢/mile for 2025) or actual expenses including gas, insurance, repairs, and depreciation.
Home Office
If you use a dedicated space in your home regularly and exclusively for real estate business, you can deduct a portion of rent/mortgage, utilities, and insurance.
Marketing and Advertising
Website hosting, business cards, yard signs, print ads, Facebook/Google ads, photography for listings, virtual tours, and drone footage.
MLS and Association Fees
Multiple Listing Service (MLS) dues, National Association of Realtors (NAR) fees, state and local board dues, and lockbox fees.
Technology and Software
CRM software, transaction management tools, e-signature services (DocuSign), showing apps, and your cell phone plan (business portion).
Professional Development
Real estate courses, designations (CRS, ABR, GRI), coaching programs, conferences, and continuing education required for license renewal.
Client Gifts and Entertainment
Closing gifts for clients (up to $25 per person deductible), client appreciation events, and staging costs for listings.
Errors and Omissions Insurance
E&O insurance premiums required by your brokerage or state to protect against claims.
Expenses to Track
Self-Employment Tax Considerations
As an independent contractor, you'll pay both the employee and employer portions of Social Security and Medicare taxes (15.3% total on net earnings). However, you can deduct the employer portion (7.65%) as an adjustment to income.
Vehicle Deduction Strategies
Real estate agents typically put significant miles on their vehicles. You have two options:
Standard Mileage Rate (Simpler)
- 70 cents per mile for 2025
- Must use from the first year the car is used for business
- Still deduct parking and tolls separately
Actual Expense Method (Often Higher)
- Deduct business percentage of gas, insurance, repairs, depreciation
- Requires detailed records of all vehicle expenses
- Calculate business use percentage based on miles
Most agents find the standard mileage rate simpler, but high-mileage agents with newer vehicles may benefit from actual expenses.
Home Office Requirements
To claim the home office deduction, your space must be:
- Used regularly - Consistent business use, not occasional
- Used exclusively - No personal use (no guest bedroom that doubles as an office)
- Principal place of business - Where you conduct substantial administrative work
You can use the simplified method ($5 per square foot, up to 300 sq ft = $1,500 max) or calculate actual expenses.
Quarterly Estimated Taxes
Since no taxes are withheld from your commissions, you're required to make quarterly estimated tax payments. Missing these can result in penalties. Consider setting aside 25-30% of each commission check for taxes.
Commission Splits and Fees
Fees paid to your brokerage (desk fees, commission splits paid to broker) are deductible business expenses. Track these carefully as they can be significant.
Use a mileage tracking app religiously - real estate agents often drive 10,000+ business miles per year.
Keep a dedicated credit card for business expenses to simplify tracking and documentation.
Photograph client gifts and save receipts - the $25 per person limit is strictly enforced.
If you use your personal phone, document the business use percentage (often 60-80% for agents).
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