Running your own real estate business comes with plenty of perks—flexibility, independence, and the potential for significant income. But it also comes with a long list of expenses that can quickly add up: driving to property showings, staging homes, printing marketing materials, paying for MLS access, and investing in professional development.
The good news?
Many of these expenses are tax-deductible. Yet, every year, thousands of agents miss out on valuable tax savings simply because they’re unaware of what they can legally write off.
If you’re a U.S.-based real estate agent, understanding which expenses qualify as real estate agent tax deductions can make a meaningful difference in how much you owe—or get back—come tax time.
From common write-offs like vehicle mileage and office supplies to often-overlooked deductions like software subscriptions and client entertainment. However, knowing what’s deductible (and how to track it) is crucial for financial health and business growth.
In this guide, we’ve compiled a detailed, easy-to-follow checklist that breaks down the top tax deductions every real estate professional should know.
Whether you’re a solo agent, part of a team, or just starting out in the industry, this resource will help you stay compliant, reduce your taxable income, and keep more of your hard-earned commissions in your pocket.
Let’s dive into the ultimate tax savings checklist for real estate agents.
Tax deductions checklist for Real Estate Agents (U.S.)
1. Vehicle mileage and expenses
These deductions are related to miles driven for business purposes, like client meetings and property showings. You can choose between the IRS standard mileage rate or actual expenses (gas, maintenance, insurance).
2. Home office deduction
If you use a dedicated space at home for work, you may deduct a portion of your rent, mortgage interest, utilities, and internet based on the square footage used.
3. Marketing and advertising costs
Expenses for business promotion—such as digital ads, flyers, business cards, signs, social media promotions, and websites—are fully deductible. Real estate agents often overlook marketing as a deductible expense, learn how to optimize your strategy with this real estate marketing plan tailored for agents.
4. Professional fees and licenses
Fees paid to your broker, MLS, real estate associations, license renewal costs, and regulatory dues are deductible as business expenses.
5. Education and training
Courses, certifications, seminars, webinars, and books that improve your skills or keep your license active are deductible.
6. Office supplies and equipment
Items like printers, paper, pens, phone, computer, and furniture used for business can be deducted in full or depreciated over time.
7. Phone and internet bills
If you use your phone or internet for work, you can deduct a business-use percentage of your monthly bills.
8. Client gifts
Gifts up to $25 per client per year are deductible under IRS guidelines. Keep receipts and document the business purpose.
9. Client meals and entertainment
You can deduct 50% of meal costs if they are directly related to business activities (e.g., closing lunches or networking).
10. Business software & subscriptions
CRM tools, email marketing platforms, lead generation apps, accounting software, and virtual tour subscriptions are all deductible.
11. Insurance premiums
Deductions include E&O (Errors & Omissions), business liability insurance, and even health insurance if you’re self-employed.
12. Tax prep and legal fees
Expenses for hiring a CPA, using tax filing software, or consulting a tax attorney for your real estate business are deductible.
13. Retirement contributions (for self-employed agents)
Contributions to retirement plans like SEP IRAs or Solo 401(k)s can be tax-deductible and help build long-term financial security.
14. Depreciation on business assets
Large purchases like laptops, cameras, or office furniture may qualify for depreciation over time or a Section 179 immediate deduction.
Bonus Tip: Keep accurate records year-round
Use an app or spreadsheet to track expenses and keep digital copies of receipts. Good records are your best defense in case of an audit.
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How to reduce taxable income as a Real Estate Agent
Reducing your taxable income is one of the smartest ways to lower your overall tax burden as a real estate agent, especially if you operate as an independent contractor or are self-employed. Since you’re essentially running your own business, the IRS allows you to deduct certain expenses that are considered “ordinary and necessary” for your work.
Here’s a breakdown of strategies you can use to reduce your taxable income legally and efficiently:
1. Claim all eligible business deductions
Every legitimate business expense reduces your taxable income. Common tax deductions for real estate agents include:
- Mileage and car expenses for driving to showings and meetings
- Marketing and advertising (flyers, Facebook ads, websites)
- Office supplies and equipment (laptop, printer, stationery)
- Home office expenses if you work from home)
- Phone and internet bills (proportional to business use)
- MLS fees, license renewals, and association dues
- Client gifts and meals (within IRS limits)
- Software and subscriptions (CRM tools, real estate platforms)
Every dollar you deduct reduces the amount of income the IRS taxes.
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2. Contribute to a retirement plan
As a self-employed professional, you can open retirement accounts like:
- SEP IRA
- Solo 401(k)
- Traditional IRA
Contributions to these accounts are tax-deductible, which means you can reduce your taxable income while saving for the future. For example, a Solo 401(k) allows you to contribute both as an employee and employer, potentially allowing you to deduct tens of thousands of dollars
3. Track the depreciation of major purchases
If you’ve bought expensive business assets (e.g., a laptop, camera, or even a portion of your car used for work), you may not deduct the full cost in one year—but you can depreciate it over several years. Alternatively, you might be eligible for a Section 179 deduction, allowing you to write off the entire cost in the year of purchase.
4. Use the home office deduction
If you use part of your home exclusively and regularly for business, you may qualify for this home office deduction. You can either:
- Use the simplified method (e.g., $5 per square foot, up to 300 sq ft)
- Or the actual expense method, calculating the business portion of rent, utilities, and home maintenance
5. Hire a tax professional
Even if you’re great at sales and marketing, tax planning is a complex area. Working with a CPA who understands the real estate industry can help you uncover deductions you might miss and structure your finances to minimize taxable income year after year.
Quick Example
Let’s say you earned $100,000 in commissions:
- You deduct $5,000 in vehicle expenses
- $8,000 in marketing
- $2,500 in home office expenses
- $6,000 in SEP IRA contributions
That’s $21,500 in deductions, reducing your taxable income to $78,500—potentially saving you thousands in taxes.
Common tax mistakes Real Estate Agents should avoid
1. Mixing personal and business expenses
One of the most common mistakes is using the same account or credit card for personal and business purchases. This can create confusion during tax season and raise red flags during an audit.
2. Poor recordkeeping
Failing to track mileage, save receipts, or log expenses accurately can lead to missed deductions or compliance issues. Always maintain organized, up-to-date records using reliable accounting tools or apps.
3. Forgetting quarterly estimated taxes
If you’re self-employed, the IRS expects you to pay taxes quarterly. Missing these can result in penalties and interest.
Got tax questions? We’ve got answers for real estate agents
1. Can you write off expenses as a real estate agent?
Yes, real estate agents can write off a wide range of business-related expenses that are considered “ordinary and necessary” by the IRS. This includes costs like marketing, vehicle use, office supplies, software, education, and more.
2. Can realtors write off car payments?
Not directly. You can’t deduct the full car payment unless it’s a business-only vehicle. However, you can deduct either the business-use percentage of actual car expenses (including depreciation) or use the IRS standard mileage rate, whichever gives you a better return.
How do I track and deduct mileage as a real estate agent?
Use a mileage tracking app like MileIQ or Everlance to log every business-related trip. At tax time, you can choose to deduct mileage using the IRS standard rate or actual vehicle expenses based on business use percentage.
Can I deduct my home office if I also work from a brokerage office?
Yes, if you have a dedicated space at home used exclusively and regularly for your real estate business, it still qualifies—even if you also use a brokerage office. Just ensure you meet the IRS criteria.
Are marketing and advertising expenses fully deductible?
Yes, 100%. You can deduct the full cost of flyers, business cards, social media ads, website design, staging, photography, and any other marketing efforts aimed at generating business.
How much of my phone and internet bills can I write off?
You can deduct the business-use portion of your phone and internet bills. For example, if you use your phone 70% of the time for work, you can deduct 70% of that bill.
Can I deduct client gifts or meals, and what are the IRS limits?
Yes. You can deduct up to $25 per client per year for gifts. For meals, you can typically deduct 50% of the cost if the meal has a clear business purpose, such as client meetings or networking.
What real estate software and tools are considered tax-deductible?
Any software or app you use for business qualifies. This includes CRM systems, lead generation platforms, email marketing tools, transaction management software, and even Canva or Adobe tools for design.
Can new real estate agents deduct the cost of getting licensed or trained?
Generally, initial licensing costs are not deductible because they qualify you for a new trade. However, continuing education, renewals, and training that improves your existing skills are deductible.
How do self-employed real estate agents handle retirement contributions for tax purposes?
Self-employed agents can contribute to retirement accounts like a SEP IRA or Solo 401(k). Contributions are tax-deductible and reduce your taxable income, helping you save for the future while lowering your tax bill.
What’s the best way to keep records and receipts for tax deductions?
Use digital tools like QuickBooks, FreshBooks, or Expensify to track income and expenses. Store receipts digitally and categorize transactions regularly to stay organized and be audit-ready.
Conclusion – don’t leave money on the table
As a real estate agent, your ability to maximize deductions directly impacts your bottom line. From mileage and marketing to software and home office costs, every eligible deduction reduces your taxable income—and increases your take-home pay.
But the key is doing it right.
Talk to a qualified tax professional who understands real estate businesses. They can help you stay compliant, uncover hidden deductions, and plan for long-term tax savings.
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