Quarterly Tax Tips for Real Estate Agents

Piggybank with eyeglasses and calculator

Benjamin Franklin once said, “In this world, nothing is certain except death and taxes”—and seasoned real estate professionals will likely agree. Even if a real estate agent works for a firm or brokerage, the IRS considers them to be the sole proprietor of their own business, so filing taxes each year may feel a bit harrowing.

The good news is that many business expenses are deductible, and by paying quarterly, you can stay ahead of IRS deadlines. We answered some common questions from real estate agents so you can avoid common mistakes and manage your business like a tax pro!

How Do Real Estate Agents Reduce Taxes?

The best way to reduce your yearly tax bill is by taking full advantage of tax deductions. Even if your expenses don’t feel like much, a little bit here and there adds up fast! Here are some common tax deductions for real estate professionals:

  • Commission paid to other real estate agents or your employees is deductible.
  • Home office supplies used regularly and exclusively for business purposes can be deducted.
  • Vehicle mileage exceeding 10,000 miles a year can be deducted at $0.655 per mile, but only if your driving was for business purposes.
  • Continuing education and training course expenses can be deducted as long as they are required for real estate and not used for another industry.
  • Business lunches are deductible if they take place with clients or other real estate professionals for business purposes.
  • Memberships, licenses, and insurance may require regular fees, which can be deducted from your tax bill. However, organizations that lobby or advocate for political candidates are exempt from this allowance.
  • Software that is necessary to successfully run your business, such as accounting software or customer relationship management (CRM) can also be deducted.

How Much Can a REALTOR® Write Off for Gifts?*

Closing gifts are a fantastic way to personalize your client’s experience, but the IRS only allows you to deduct up to $25 per gift from your taxes each calendar year. The IRS also states that incidental costs, such as shipping, cannot be deducted. Keep close track of your expenses with a spreadsheet or even an accounting software such as Quickbooks to ensure you don’t have any surprises when it’s time to make your quarterly tax payment.

Remember, tax season doesn’t have to be stressful if you plan accordingly. Paying quarterly is the easiest way to avoid tax deadline stress, and maximizing your deductions is the easiest way to lower your tax bill.

*Except where prohibited by law.

Contact an accounting professional before making any financial decisions. The material in this article is for your information only and is not intended to be used in lieu of seeking additional consumer or professional advice.

Reference to any specific brand, product, or service does not constitute endorsement by ORHP. ORHP does not receive compensation for providing third-party links.

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