Working for yourself as a real estate agent definitely offers some perks. You have full control over your schedule, and you can decide how much money you want to make in a year. There are also some legal tax deductions for real estate agents you will be able to utilize. The deductions can really be a big help for people that are just starting out in the industry or even seasoned agents.
We’re going to try to shed some light on what tax deductions you may be able to utilize as a real estate agent. Naturally, you’ll want to run these deductions past your certified accountant who understands the rules better than anybody. The last thing you want to do is get in over your head by going down the wrong path. In fact, a friend of mine was working with a mentor he felt was questionable because of the way the mentor handled the books. My friend ultimately switched mentors because of the possible negative repercussions.
The major challenge with licensed real estate agents today is that a lot of them keep their license but are not active in the industry. Being active in the industry is vital for utilizing deductions. Lets specifically look at some deductions:
1) Vehicle Mileage
Every real estate agent that is actively building the business is going to pile on a lot of mileage. The IRS sets a standard mileage rate every year that includes gas wear and tear and other expenses you’d have while driving your car. This is very good because it is so easy to have a car that isn’t worth a lot in the end because of the mileage real estate agents put on in a given year.
2) Leasing Or Buying A New Car
Interestingly, first impressions matter in the real estate industry. This can be a bit difficult because we’ll likely end up getting a vehicle that carries a more significant price tag. In some instances, a lease offers more tax deductions, but it also restricts you to mileage.
3) Your Home Office
When you set aside a dedicated place in your home as an office, you can take advantage of deductions used for the business. You have options to handle this a few different ways; you can do prorated expenses, dedicated expenses or you can take the standard home office deduction.
4)Gifts For Your Clients
The good news here is you can write off a portion of your closing gift to your client, but it’s only a minimal amount. Some mentors have great ideas on this topic and depending on the person you’re looking to follow. You can get some sound advice.
5)Contributions To Your Retirement Plan.
If you do not have a retirement plant setup, you should consider doing this right away. However, the deductions are limited to the amount you contribute.
6)Advertising And Marketing Expenses
To become a top producer, you’re going to be doing a lot of marketing. The good news here is you can write off your marketing, and this can be significant.
7) Using Signage
Thankfully due to technology this landscape is changing quite a bit in the industry. The use of signage as a strategy for marketing is changing quite a bit. However, this is still a viable right off for your business.
8) Software And APPS
The use of software and apps is an element that is used quite a bit more nowadays. The ability to write off some of these costs are fantastic.
Having the ability to write off Uber or TAXI fares is fantastic if you’re living in a large city. It’s not always easy to get around and sometimes a quick taxi ride is the best.
10)Trade Conferences And Seminars.
When you’re building your business fast and hard, sometimes you need to go to conferences. These conferences can be at a significant distance. Thankfully, you’re able to write off the travel expenses. This can also include lodging expenses and a percentage off of your food.
There are many deductions you can take advantage of in your business. We’ve only touched on a number of them here, and they do change frequently. The best thing to do would be to talk to someone certified in the area of accounting to know what you’re entitled to each year. This is a step you don’t want to miss out on because you would literally be leaving money on the table.