Taxes and Credits for Real Estate Professionals
It's Tax Time
As a real estate professional, you’re likely used to juggling lots of data. But when it comes to tax-time, you’d be surprised to know there are many deductions you may be overlooking. Brush up on the following information to maximize your deductions and save big on expenses. And don’t try to go at it alone; QuickBooks Self-Employed auto-categorizes over 70 percent of business transactions for you, saving you time and money when tax season rolls around.
From online ads to business cards, websites, flyers, signs and even commercials, successful real estate agents are well versed in the gamut of marketing material. But how do you deduct these marketing expenses? The great news is that all marketing fees, even writing and design hire-outs, are deductible. From the agency that designed your website to the copy-editor who proofreads your print material, you can deduct these costs annually.
If you drive 10,000 miles or more annually for your real estate business, you’ll get the biggest tax break if you take the standard mileage deduction, versus tracking every single auto-related expense. In order to take the standard mileage deduction, you will need to keep a detailed log of your driving, including the date and time of your trip, as well as the exact mileage. Sound overwhelming? It doesn’t need to be. You can track this easily with the QuickBooks Self-Employed tool.
If you drive less than 10,000 miles, you may save more by tracking each expense. Learn more about deducting your standard miles versus actual vehicle expenses here.
Staples, printer ink, photo copies, postage, oh my. It may seem like you’re endlessly shelling out bucks for office supplies. These are tax deductible—as long as you save your receipts. Other office supplies that are deductible are big ticket items like printers, scanners, and computers used for work-only. You can also deduct your office phone line, or the portion of your cell phone that you use for work.
If you feel overwhelmed logging all your receipts, utilize Quickbooks Self-Employed to simplify the process. With this took, you can snap a photo of your receipt to store it digitally.
Do you have a home office? You can write it off. You don’t need to have a whole room dedicated to your work—even a nook carved out of the family room or spare bedroom count toward that home-office write off. There are two options when writing off your home office. Many self-employed agents opt for the simplified method in order to make the most of their deduction, but if your home office is huge (think that refinished basement), or you live in an extremely costly area, the “regular” method of tracking your actual expenses may bring more bang to your deduction bucks. You can learn more about each approach here.
If you pay a desk fee at your office or brokerage, then you can write this fee off. Using Quickbooks Self-Employed, you can set a rule to automatically categorize your desk fee as an expense, whether its monthly, quarterly or annually. However, it’s important to note that if you’re deducting a home office, you can’t also deduct your brokerage desk fee. It may seem unfair if you work both at home and at an office, so crunch some numbers to determine which deduction will yield a bigger benefit.
Meals and entertainment.
It may seem strange to deduct entertainment and food from your taxes, but it’s pretty typical, especially if you spend many lunches shmoozing potential clients or chatting best practices with colleagues. Whether you’re traveling or catering to clients in your home-town arena, you can deduct 50 percent of your total expense, which includes tax and tip for the meal. If you threw an open-house, you can deduct 100 percent of your spend on food and refreshments.
As a real estate professional, your state license renewal, professional memberships, and MLS dues are all tax deductible. Business insurance, E&O insurance and any real estate taxes necessary for your business are also fully deductible. The only membership fees not deductible are those attributed to lobbying or political advocacy. Click here for more information on what is deductible.
Software and tools
From lead-generation tools to CRM software, the majority of your business tools are tax deductible.
If you’re traveling for a real estate event you will likely be able to deduct your transpiration and accommodation costs. Be sure to properly track your travel info using Quickbooks Self-Employed. With this tool, you can track travel expenses immediately with a simple click of a button.
As the industry shifts, successful real estate professionals need to stay on top of their education to remain relevant. In many states, continuing education is a requirement for real estate professionals. Whether you’re attending classes, conferences or trade shows, or shelling out for coaching, track these expenses and deduct them at tax time.
In order to make the most of your tax deductions, consider using QuickBooks Self-Employed to automatically track expenses and be fully prepared come tax time.
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