It may only be the beginning of the holiday season, but tax season comes right afterwards so now is the time to start planning. Especially while we are still in the current year you may want to take advantage of some things now so that you can write them off when you prepare your tax returns as expenses.
So what expenses can you deduct on your taxes? It is important to know what things you as a real estate professional can deduct so that you can maximize your profits. Here is a closer look at a list of things you should consider this tax season.
Vehicle or mileage – For most of you, your car is an extension of your office. You spend countless hours per week traveling from home to home and the office. There are a couple of options such as the actual cost method versus another if you drive more than 10k miles per year. See more detail here.
Marketing and Advertising – Don’t forget to add up all of your marketing and advertising expenses. This means any print ads, websites, hosting fees, flyers, business cards and the like.
Home office – Do you have a dedicated area that you use as a regular home office? If so then you are eligible for a deduction if you don’t pay a desk fee at your broker’s office. Here too there are a few options to choose so research them here and select the one that is best.
Desk fees – Regardless of which firm you work with, if you have desk fees then they are deductible. Just note that if you are taking a home office deduction then you cannot take the desk fee deduction as well.
Office supplies – Don’t forget all of the incidentals like stationery, photocopies, or any larger purchases that can be depreciated over the years like furniture, fax machines or computers.
Meals/entertainment – There are 2 options that you can use as deductions for this. Business travel expenses or when dealing with clients or other professionals conducting business. In either case you can deduct 50% of your total expense including tax and tip. Regarding entertainment, you can only take the meal deduction but only if business was discussed during the meal or immediately before or after.
If providing food at specific events such as an open house then you can deduct 100% of the cost.
License fees, insurance or memberships – Insurances like E and O and general business insurance are both deductible. Annual fees for memberships, license renewal and MLS dues are also deductible. Be sure you do not deduct anything that includes lobbying or political advocacy as those are not deductible.
Professional Development – There can be many conferences, trade shows, coaching or the like to attend as you stay competitive. If you need to travel to attend any events, you may be able to deduct transportation and accommodation costs.
Software and business tools – Any CRM or lead generating subscriptions will be fully deductible as well.
