10/18/2024
As a real estate professional, you have many opportunities to reduce your taxable income with business-related deductions.
Here’s a quick guide to the top deductions you should know about:
1. Licenses & Fees 🏛️
Renewal fees, professional memberships, and MLS dues are all deductible.
2. Business & E&O Insurance 🛡️
Protecting your business is crucial. Premiums for general business insurance and Errors & Omissions (E&O) insurance are fully deductible.
3. Commissions Paid 💵
If you're paying commissions to other agents or employees, those payments are deductible as business expenses. Don’t miss out on this valuable write-off!
4. Productivity Software 💻
Any software or app you need to run your business is fully tax-deductible, including:
*Business and accounting software
*Lead generation subscription services
*CRM software
*Mileage and expense tracking software
*Tax software, and more!
5. Property Marketing 📣
If it helps market your properties, it’s deductible! This includes:
*Photography and staging
*Digital ads
*Yard signs and print materials
6. Desk Fees & Home Office Deduction 🏠
Paying desk fees to a brokerage? They’re deductible. If you work from home instead, you might qualify for a home office deduction, which can also cover a portion of utilities, internet, and other home expenses.
7. Mileage & Car Expenses 🚗
Do you drive to showings, client meetings, or open houses? Track those miles! With a rate of 67 cents per mile, your mileage deduction can add up quickly. Consider using an app to make tracking easy.
8. Business Meals 🍽️
Taking clients out for lunch or grabbing a meal while traveling for business? You can deduct 50% of these costs, which can add up over the year.
9. Continuing Education 🎓
Stay on top of your game by taking courses, attending conferences, and expanding your knowledge. Many of these expenses are deductible, but they must relate to your existing real estate business.
10. Client Gifts 🎁
If you sent any client gifts throughout the year—gift baskets, tickets to events, or other items- these are partially deductible, as long as you follow the IRS regulations:
*You can deduct up to $25 of the cost of business gifts that you give to each person throughout the year.
*If you and a spouse give gifts to the same person, you can only deduct the cost of one gift.
*Incidental costs (packaging, shipping, wrapping, etc.) are not included in the $25 limit.
*Gifts that cost $4 or less and have your business name engraved on them are not deductible.
*Keep records proving the business purpose of the gift as well as the amount spent.
11. Health Insurance Premiums Deduction 🩺
If you’re a self-employed realtor and pay for your own health insurance, the cost of the premiums may be deductible. To qualify, keep in mind:
*You can deduct health insurance premiums for yourself, your spouse, and any dependents.
*You cannot deduct health insurance premiums if they are paid through any kind of pre-tax program.
*You cannot deduct health insurance premiums for any month that you were eligible to participate in a health insurance program provided by your employer or your spouse’s provider.
*Health insurance premiums are an adjustment to your income rather than an itemized deduction. You can claim this deduction even if you’re not itemizing deductions.
12. Retirement Contributions 📈
Contributions to retirement accounts, such as a Solo 401(k) or SEP IRA, are often deductible, helping you save for the future while reducing your taxable income. Remember:
* Contribution limits for 2024 are $23,000 for employee contributions and $69,000 for combined employee and employer contributions.
* Make sure contributions are made by the applicable deadlines to maximize your deductions.
💡 Need Help with Your Taxes?
If you have any questions or want to make sure you’re getting the most out of your deductions, reach out today! We’re here to help you navigate the complexities of tax planning so you can focus on what you do best—selling homes! 🏡
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