If you’re a Realtor or loan officer, it probably feels like you spend the lion’s share of your time collecting and organizing other people’s documents. But now that it’s 2017 and April 15 isn’t too far away, it’s time to get your own financial house in order for the IRS.
Considering that most Realtors, loan officers, and brokers are self-employed, that means getting a (hopefully sizable) 1099 with your income and commissions, so using every tax deduction that is legally available is critical to your bottom line.
You worked so hard all year to earn that income, so it’s worth a little more time and effort to make sure you keep as much of it in your pocket as possible.
Just how much can a few new tax deductions save you? To use an example just as a hypothetical illustration, let’s say you’re single and your taxable income is $100,000. Every dollar you deduct from your taxable income will save you almost 50 cents in taxes that you have to pay! Remember, too, that you’ll be paying federal, state, and probably self-employment taxes, so the right deductions can go even further. This includes 28% in federal income taxes, 15.3% in self-employment taxes, and an average of 6% in state income taxes.
The good news is that there are scores of potential tax deductions for real estate and mortgage professionals to take advantage of. In fact, according to the IRS, any expense for your real estate or lending business is deductible if it is:
- ordinary and necessary;
- directly related to your business; and
- reasonable in amount (see: Internal Revenue Code Section 162).
The expense doesn’t need to be a necessity, just help your business in some way, even if it’s small or a one-time expense.
But remember that you can’t deduct personal expenses, and that’s a fine line you’ll have to clearly prove with receipts, records, account statements. Etc. in case of an audit
Disclaimer: we are not tax experts or tax preparers. This information is collected from multiple tax blogs, articles and experts online with the intention of alerting you to some of the tax deductions so you can discuss them with your CPA or tax preparer.
Here is a list of common tax deductions for Realtors and loan officers to help get you started:
Advertising and Marketing
Billboards/Bus Stop Ads
Brochures/Flyers
Business Cards
Copy Editor Fees
Clothing, etc. with your logo in it
Direct Mail
Email Marketing and Newsletters
Events
Graphic Designer Fees
Internet Ads (Google, Facebook, etc.)
Leads/Mailing Lists
Logo
Marketing Services
Mobile Apps
Networking Event Costs
Post Cards
Print Ads (Newspapers and Magazines)
Promotional Materials
Radio Ads
Signs/Banners
Social Media Marketing Costs
Television Ads
Web Design
Web Hosting and Domain Fees
Agent Improvement
Books (Sales Books, RE Books, etc.)
Continuing Education
Magazine Subscriptions
Newsletter Subscriptions
Sales Training/Coaching
Seminars
Textbooks/Reference Books
Trade Publications
Auto and transportation
Either Business Mileage (55.5 cents per mile) or…
Auto Expenses:
Car Washes
Depreciation/Lease Payments
Gas
Insurance
Interest
License/Registration
Maintenance
Repairs
Tires
Both Methods can Deduct:
Car Washes
Tires
Travel
Airfare
Cab Fare/Uber/Lyft
Car Rental
Dry Cleaning/Laundry
Lodging
Meals and Entertainment ((only 50 percent deductible)
Parking/Tolls
Taxi, Train, Subway, Bus
Tips
Business Meals, Business Entertainment, Communication
Answering Services
Cell Phone Service
Fax Expenses/Efax
Interactive Voice Response (IVR)
Internet Service
Office Telephone/VOIP
Toll Free Number
Equipment
Briefcase, laptop bag, business bag etc.
Mortgage calculator (or normal calculator)
Camera/Lenses
Cellphone/Smartphone
Cleaning Equipment (Vacuum Cleaner)
Computer
Equipment Repair
Flashlight
GPS
Hard Drives/Thumb Drives
Ipad/Tablet PC/Android
Laptop
Lock Boxes/Locksmiths/Keys
Maps
Printer
Scanner
Staging Items – Furniture
Tape Measure
Video Camera
Employee Wages
Clerical Support
Family Wages
Payroll/Unemployment Taxes
Sales Assistant
State and Local Business Taxes
Virtual Assistant
Health Insurance, Home Office
Insurance
Mortgage Interest/Rent
Property Taxes
Repairs/Maintenance
Security System
Solar
Utilities
Office Expenses
Bank Charges
Brokerage fees
Desk Fees
Client Refreshments (Coffee, Water, etc.)
Copier Fees
Janitorial Services
Office Furniture
Bookshelves
Chairs
Desks
Filing Cabinets
Office Supplies
Envelopes
Folders
Paper
Pens
Postage
Stationary
Software/Programs
Technology Fees
Toner/Ink
Office Rent
Online Storage of Business Files
Software
Professional Fees
Accountant Fees
Association Dues/Fees
CAR
NAR
SAR (or your regional association)
NAMB
Chamber of Commerce
Networking groups
Referral groups
Bank Fees
Bookkeeping Fees
Business Liability Insurance
Business Licenses
E & O Insurance
Franchise/Affiliation Fees
Interest on Business Purchases
Legal Fees
MLS Fees
Real Estate License and Renewal
Tax Prep Fees
Retirement
Defined Benefit Plan
Self Employment Pension (SEP)
Simple IRA
Solo 401k
Selling Expenses
Appraisal Fees
CL100 Fees
Client Gifts (<$25 per client)
Closing Attorney Fees
Concessions
Courier Services/Delivery Fees
Finder Fees/Referral Fees
Home Repairs to sell listed property
Home Warranty
Inspection Fees
Notary Fees
Open House Expenses
Photo Editing
Staging Fees
Start-Up Expenses
Including organizational costs
Secretary of State filing, etc.
Domain registration
Marketing and printing costs
Licensing fees