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Whenever a real estate agent wants to travel, they must consider the expenses and decide if they can write off the travel. Some things they may be able to write off include meals and advertising expenses. But, other expenses can be hard to write off, such as research and evaluation of a new property.
Education fees
Depending on the state, real estate agents may be able to write off education fees as a work-related expense. Investing in continuing education (CE) allows real estate agents to maintain their professional knowledge and stay competitive in the industry. Many agents also earn special designations that allow them to distinguish themselves from others in their field. This helps them to define their niche in the real estate industry.
Aside from writing off educational fees, real estate agents can also write off the cost of continuing education classes. The state requires these for continued licensing and to keep current on the latest trends in the industry. For example, a salesperson may attend a seminar on advanced real estate strategies. A real estate broker or agent may attend a class on finance. These costs are tax deductible because they are considered educational expenses that improve skills needed to do their job.
Several states require real estate agents to take continuing education classes to maintain their licenses. During these courses, the agent or broker can earn a specialty designation, such as a broker’s license, enabling them to continue selling real estate. This is a significant tax benefit for real estate agents and can help them to build their businesses.
Aside from deductible education fees, a real estate agent may also qualify for a lifetime learning credit, which reduces the income tax liability by the same amount as the education expense. Often, educational expenses are eligible for the federal tuition and fees deduction. This is because eligible educational institutions participate in federal student aid programs with the U.S. Department of Education.
Meals
Whether planning a business trip or on the road for your next real estate sale, you should make the best use of your hard earned dollar by charging all your business expenses on one credit card. Using a single card can make tracking your expenses a breeze. It also allows you to export your charges to a spreadsheet or Google Docs account to keep track of them all.
For instance, if you are going to a conference, you should be able to use a mileage tracking app for realtors to write off the expense of your airfare. You can also write off the cost of hotel accommodations and the cost of meals, including lunch and dinner. For example, you could charge for an overnight stay in a hotel and write off the room cost and food, so long as you are on your way to a meeting in the area. It is always a good idea to have one credit card for all your business spending, preferably a business card-sized card.
Advertising expenses
Whether you’re a new real estate agent or an experienced one, marketing and advertising are essential to your business. Fortunately, most of these expenses are tax-deductible. There are some specific guidelines that you should follow to take advantage of these deductions.
Advertising expenses include all of your usual advertising materials. These may include signs, brochures, print advertisements, and web ads. In addition to these, you may deduct ad placements, open houses, and other marketing activities.
To deduct your advertising costs, you must keep detailed receipts. In most cases, you should save physical receipts and emailed receipts. You should also keep records of your monthly expenses for at least three years. If you’re unsure how to calculate your tax write-offs, you can get help from a certified public accountant.
Other deductions you can take are your real estate association memberships, which are tax-deductible. You can also deduct the cost of MLS fees. And remember, if you have employees, you can deduct their commissions as part of your business expenses. In addition, you can also deduct the cost of your professional training.
You can also deduct your auto-related expenses. These include the cost of gas, repairs, and maintenance. Sometimes, you can deduct the cost of advertising on your car. However, you cannot deduct the cost of your auto-related expenses if they are used for personal reasons.
In addition, you can also deduct the costs of your E & O insurance. The government allows you to deduct the cost of professional training. Successful real estate agents in Cincinnati Ohio often invest in continuing education, coaching, and training in their field.
Subscriptions
As a rookie agent, you might not require many subscriptions, but as you advance in your business, more subscriptions will be able to assist you in managing your workflow. A few deductible subscriptions are as follows:
Customer Relationship Manager for you (CRM)
Accounting programs
Online storage
industry news sources (like Inman or your local news source)
- additional subscriptions to software (Adobe, MS Office, Canva Pro, DocuSign, etc.)
Charges for Office Space
Expenses for office space can be a little unclear. Especially considering how many real estate brokers work out of their homes and businesses. Let’s examine each of these workstations in turn.
Office at home
Your home office space must meet specific requirements to be considered:
Serve as your principal place of business. Perhaps you have a rented office space for client meetings, but most of your work is done in your home office.
Be routinely and solely utilized for work (not a combination of work and personal use).
Be a packed house (not just an area of a room used for other purposes).
You can take the Simple Square Footage Deduction or Itemizing if you have a home office. The straightforward deduction is probably your best option if your home office is 300 square feet or less. However, you can always calculate both approaches to optimize your annual reduction.
