Tax season is coming, and real estate agents should be aware of the deductions they can take advantage of. Unfortunately, there’s no single overarching listing that can tell you about all the deductions you should be using to lower your taxes. For many agents, the taxman can take a considerable bite out of their earnings.
If you’re an agent preparing for tax season, where do you find these deductions, and which ones should you prioritize in your filing? Here, seven members of Forbes Real Estate Council discuss the tax deductions they find most important to professionals in their field.
Members of Forbes Real Estate Council detail tax deductions real estate agents should look into.
Photos courtesy of the individual members.
1. Staging
One deduction agents tend to forget about is staging. Many agents purchase a wide variety of furniture, art, lighting, accessories, etc. and include them as part of their service. Remember that the storage and purchase of these items can be deducted from your yearly tax obligation. Always be sure to reach out to your CPA to better learn how to take advantage of this deduction. – Ivan Estrada, Ivan Estrada Properties
2. Tax Preparation Services
The tax professional usually doesn’t enter the process until tax season is here. One deduction that agents should know about is the deduction of expenses for tax preparation services. There is too much at stake! Invest in a consultation with a qualified tax accountant or CPA at the beginning of the tax year to discuss how to keep more of what you make and which deductions make sense for your business. – Cheryl Abrams, Re/Max United Real Estate
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3. Marketing And Social Media
As the broker/owner of a franchise, I find sometimes our agents do not fully grasp that they are, in essence, a business entity of their own. They are sometimes reluctant to invest in premium marketing or outstanding social media, all of which are tax-deductible expenses. I try to teach them to invest in themselves, the net after-tax cost is returned exponentially. – Gregory Gunter, Berkshire Hathaway HomeServices Colonial Homes San Miguel
4. Therapy And Mental Health Treatment
Costs for therapy and mental health treatments, especially during Covid times, are deductible. These are expenses that you need to ensure you can continue to generate income and they should not be overlooked. – Chris Turcotte, Centum Financial Group
5. Education And Training
Education and training, including continuing education courses required to renew your license, are deductible expenses. NAR studies show that agents with more education and designations earn higher commissions. Take designation courses and deduct the course fees and renewals on your taxes. – Erica Ramus, RAMUS Realty Group
6. Travel Expenses
Travel expenses are an important tax deduction for real estate investors, especially those out of state. If you invest remotely, traveling to your investment property might add up to a significant sum. Many investors, however, are not aware that plane tickets, hotel reservations, food, local transportation and other related costs can be deducted. – Taylor Valore, Mashvisor
7. Meals With Clients
Meals with clients, or even just potential clients, are tax deductible. You do not have to have a contract signed during the meal, but as long as you talk about your business, that meal may qualify. The 2018 Tax Cuts and Jobs Act has changed how these meals can be deducted, so be sure to consult with a tax professional, as some meals are only 50% deductible. – Ron Costa, The Eighty Two Group