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  • Fabiola Litherland, CPA

Tax Deductions Guide for Real Estate Agents

The most common mistake made by self-employed individuals like real estate agents when filing their tax return is failing to know all the deductions that they are eligible. Not many business owners know that you can pay your children, have your company cover your medical expenses or even write off a hot tub as a tax deduction.

A certified tax strategist like Litherland Tax & Accounting Services can help business owners look for all the legal loopholes available.

There are a number of tax write-offs for Real Estate Agents. Read on to discover the most common real estate agent tax deductions.


Vehicle Deductions

This is a big one! The better you are doing, the more mileage you are going to put on your car. Lucky for you and your poor car, mileage driven for work is tax-deductible. In addition, if you purchase or lease a vehicle, you may qualify for additional tax deductions for Real Estate Agents.

  • Vehicle Mileage

Every year, the IRS sets a “standard mileage rate” which factors in gas, wear and tear and other expenses associated with driving. For 2019, the mileage rate is 54.5 cents per mile.

The only catch is that in order to claim the deduction, you need to keep a log of your miles.


  • Buying or Leasing a New Car

This probably won’t surprise many of you, but appearances matter in this industry. This is why having a modern, clean car that fits your personal brand is so important. Amazingly, buying or leasing a new car is tax-deductible.

While you can deduct the depreciation of a newly purchased car, you can deduct almost your entire monthly payment if you lease a car. That said, many leases have mileage restrictions, which make you pay per mile once you go over a set mileage.


Cellphones and Tablets

You can also write off your cellphone and tablets when used for business purposes. You can get a deduction on the monthly service bills as well as the purchase price or depreciation of your devices. If you’re working full-time, you can and should have a separate phone or tablet just for work. If not, you will need to log every second you use the phone for work and can only deduct that amount.


Office Supplies

Office supplies like paper, printer ink, pens and staples are all tax-deductible. You can even write off the purchase price of your chair, desk or supplies purchased to paint your office.


Outsourced Accounting Services

As a business owner, it's the not the most efficient use of your time to be tending to the books. Bookkeeping and accounting can become a drain on your schedule, especially if you make mistakes and have to unravel your work. In contrast, an outsourced bookkeeper has the expertise to get the job done quickly and accurately.


Office Rent

Office rent is one of the biggest expenses for any small business. Luckily, office rent is also tax-deductible. This also includes the common area maintenance charges that landlords pass onto tenants to clean the offices and take out the trash every day.


Office Equipment and Supplies

Similar to office rent, office equipment and supplies are also tax-deductible. This includes computers, furniture, copy machines, water coolers or anything else you purchase for your office. Generally speaking, you must depreciate or write off a portion of the cost over its useful life cycle. If your purchases meet the Section 179 criteria, you could deduct up to $1 million of all property and equipment in the first year as opposed to spreading it out over multiple years.


Internet and Phone Costs

Internet access and phone systems are also tax-deductible. Depending on the number of agents in your office, both can be significant expenses that eat into your bottom line.

Remember, documentation is very important. If you’re not in the habit of documenting every single expense, you should start today. This means documenting your mileage, keeping receipts and tracking all business expenses.


Stay tuned for more Deductions for Real Estate Agents!


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