The Complete Tax Deductions Checklist for Real Estate Agents

Just as performing more transactions can increase your income, understanding how to apply your tax deductions as a real estate agent can significantly improve your bottom line.

Agents can claim numerous deductions, including mileage at 67 cents per mile for 2024, home office expenses, and marketing costs. Knowing what deductions you’re entitled to can substantially reduce your taxable income, leaving more money in your pocket.

To help make tax time a little easier, we compiled over 75 of the top deductions real estate agents can use. It’s a good idea to familiarize yourself with this list so you can track your deductible expenses. 

First, it’s beneficial to understand how your filing status affects which deductions you can take.

Your tax status plays an essential role in determining your tax obligations and deductions. Most agents are classified as independent contractors rather than employees.

Independent contractors have more control over their work and schedule. You decide when and how to perform your duties, often using your own tools and resources.

This status affects your taxes in several ways:

As an independent contractor, you receive a 1099-NEC form instead of a W-2. That means no taxes get withheld from your income.

You need to pay self-employment tax, which covers Social Security and Medicare. The good news is you can deduct half of this tax on your return.

Keep detailed records of your income and expenses. Proper recordkeeping can help you maximize deductions and accurately report your earnings.

Remember, your specific situation may vary. Consulting a tax professional is always wise and can ensure you comply with all relevant tax laws and regulations.

To help you stay organized and benefit from your potential deductions, we created a comprehensive checklist.

Here’s a list of common tax deductions you should consider, along with some you may not have thought of:

Remember to keep detailed records and receipts for all your expenses. That can help substantiate your deductions if the IRS ever audits you.

You can download our free tax deduction checklist to ensure you don’t miss out on any expenses during the year. You can customize it to help you stay organized and maximize your deductions at tax time.

As a real estate agent, you’re usually considered self-employed for tax purposes. As a result, you need to file your taxes differently than traditional employees.

You’ll use Form 1040 to report your income and pay taxes. This form is the standard individual income tax return used by most taxpayers.

In addition to Form 1040, you need to complete Schedule C. This form is used to report your business income and expenses. It’s crucial for calculating your net profit or loss from your real estate activities.

Keep detailed records of all your income and expenses throughout the year. That includes commissions, fees, and any other money earned from your real estate work.

Track your business expenses carefully, including:

You also need to pay estimated taxes quarterly as a self-employed individual. The due dates are typically:

Consider using accounting software or hiring a tax professional to help manage your finances and file taxes accurately. These options can save you time and potentially reduce your tax liability.

If you file your own taxes, be aware of a few costly errors that real estate agents often make.  Here are some pitfalls you want to avoid:

Ignoring tax code changes: Stay informed about updates to tax laws that may affect your filing. Consider consulting with a tax professional who specializes in real estate.