There are some top tax write-offs for real estate agents and brokers for 2024 you should know about. Now, real estate agents and brokers often need to pay more attention to realtor tax deductions across the United States. Because of that, successful real estate agents almost always dread tax season.
The reason is that they will likely see a huge tax bill with savings to pay the IRS. So, SG INC CPA is here to help you change that today because real estate agents have a plethora of tax deductions at their fingertips. So, our realtor tax solutions can help you reduce your tax liability and build more wealth.
How Do You Qualify as a Real Estate Professional?
The taxpayer needs to perform more than 750 hours of service. These collective hours should be within the tax year in real property trades or businesses. It basically means that you need to be working in real estate for about 19 weeks if you work a typical 40-hour work week. So, you need to be doing a lot of real estate for real. Realtor tax deductions can adjust more than one-half of the professional services in real property trades or businesses.
Now, an example of real property trades or businesses is real estate leasing. It would be real estate brokering, it would be:
- Real Estate Management
- Real Estate Development
- Construction Work
- Material Acquisition, conversion,
- Other real estate rental property operation
Now, as long as you can satisfy those two rules, you can avail yourself of real estate agent tax deductions as a real estate professional under the IRS rules. You can also take real estate rental property losses against your active income. So, let’s get into the top tax write-offs for real estate agents.
1. Licenses and Dues
Licenses and dues are the common realtor tax deductions that you can write off with all your monthly. This would include stuff like:
- Your MLS Dues
- NRA Dues
- Your Association Dues
- Any of your Brokerage Fees or desk fees
- Other Membership Fees
2. Marketing Expenses Tax Deduction
Realtors’ taxes can also go down with the marketing and publicity expenditures. Meanwhile, marketing campaigns help you gain clients and close deals. These can also bring realtor tax deductions. So, advertising and marketing expenses are:
- Signage for your open houses
- Your listing signs
- Your business cards
If you have a website, what are your website development and hosting fees?
Of course, if you are advertising, you can deduct stuff like your ad expenses with Facebook ads or Google ads as well.
SG INC CPA helps businesses with all these for property tax deductions from your adjusted gross income to help you reduce your tax burden.
3. Vehicle Tax Deduction
Many real estate agents must use the vehicle to meet with their clients to show properties. This way, they can qualify for the vehicle tax deduction. Now, there are two ways to claim real estate tax deductions.
- First, you have the standard mileage deduction rate.
- You get to take a standard mileage rate that the IRS issues every year.
Realtors can apply for gas mileage rate tax deductions. The standard mileage rate that applies for a fuel tax deduction in 2024 is 58.5 cents per mile. The other method is the actual expense method, which is a little bit trickier. However, it gives you permission to make Real Estate Agent tax deductions for all your actual expenses with your vehicle. This deduction category could be things such as:
- Car repairs
- Gas bills
- Electricity if you have an EV car
- Interest on your auto loans
- Vehicle depreciation
4. Tax Write-offs on Meal Expenses
Realtors can invite their clients out for lunch and write off a 50% deduction of the cost of the meal. However, Real Estate Agent tax deductions do not only apply to your clients but also save your taxes. Now, if you do business meals very often, our real estate tax experts would recommend that you take notes with a few sentences on what was discussed during the meeting? This way, you actually have proof just in case the IRS asks you some questions about all your business meals.
5. Education and Training Deduction
If you want to become a top-notch real estate agent, then you should reinvest in yourself by learning from other successful agents across the world. The good news is that you can add it to your write-off in your real estate tax. The IRS permits you to have real estate tax education on training expenses. This way, you can also become a better professional.
- This could be things such as paying for online courses.
- Paying for professional coaching or consultation sessions.
- This could be buying professional real estate books.
- This could even be paying for Audible subscriptions and going to real estate conferences.
- If the training takes place outside of your residing state, then you can also write off travel expenses.
6. Home Office Deduction
The next deduction comes as the home office deduction because it’s another realtor tax deduction that doesn’t require you to spend additional money. You’re already paying for your mortgage or rent, which allows you to take another deduction without spending more money. SG INC CPA recommends some of the best places to set up a home office would be:
- A spare bedroom that may not be in use.
- You’re Basement or even a garage.
Now, there are two ways to real estate deductions on a home office. The simple method is to calculate the home office realtor tax deduction. You can do it by multiplying the square footage of the room by $5. This calculation will give you a maximum deduction of $1500.
Final Words
So sometimes, as realtors, you have some unusual expenses on real estate deals. You can have many similar realtor tax deductions. SG INC CPA can help you detect the possible Real Estate Agent tax deductions that you might ignore. These types of deductions are very unusual to find by owning your own. So, our expert team of real estate tax experts will do it on your behalf of you.