As a real estate agent filing a Schedule C as a self-employed individual, you can deduct the following qualifying expenses from your gross income:
- Auto/Mileage Expenses
- Legal/Professional Service Fees
- Contract Labor/Wages
- Advertising/Marketing Expenses
- Assets – Depreciation
- Gifts ($25 deduction limit)
- Home Office Deduction
- Self-Employment Tax
- Business Meal Expense
- Professional meetings/conferences/publications
- Education/Training Expenses
- Office Rent
- Insurance (other than Health)
- Office expenses
- Self-employed Health Insurance
1. You can deduct items such as bank fees, interest fees (loans used solely for business), notary fees, etc. under the Commission and Fees section of the Schedule C, General Expenses. Also include items such as Professional Dues
2. Under Car and Truck expenses you can claim the standard mileage rate (if you qualify). You can claim actual vehicle expenses under the Depreciation section of the Schedule C. You may claim either the mileage or the actual expenses - but not both. Gas, oil, car depreciation, etc., are examples of actual expenses. Generally, if you drive 10,000 or more miles, you would get the greatest benefit from claiming mileage.
3. Legal and Professional Service fees include fees charged by photographers (photos of home), lawyers, locksmiths, tax preparers, inspectors, home stager (unless employed by you exclusively), software storage fees, etc.
4. If you paid someone for work they did for you, but do not consider them to be an employee, enter the amount paid under Contract Labor. If you paid the individual more than $600, you would need to issue the individual a 1099-NEC form with the income reported in Box 1. If you are not sure if the individual is an employee, check with the IRS website.
5. If you paid someone for work they did for you as an employee, and you issued them a W-2, enter the amount paid to the individual as Wages in the Schedule C, General Expenses. Unemployment and FICA taxes associated with the W-2 income would be entered as Taxes and Fees on the Schedule C, General Expenses.
6. Expenses paid for marketing, such as billboard ads, flyers, signs, newspaper or digital media ads, etc., would be listed under General Expenses as Advertising Expenses.
7. Assets that were purchased for running your business, such as office furniture, copiers, printers, computers, camera (for taking photos of listings), lock boxes, home staging supplies, video camera, etc., would be depreciated over the useful life of the asset. Enter these items under Depreciation and refer to IRS Publication 946 for depreciation methods and useful life information.
8. Business Gifts are limited to $25 per person/group. To claim a deduction for a business gift, make an entry into Other Expenses on the Schedule C and report the amount.
9. The Home Office deduction requires that you have a dedicated space at home that you use exclusively for your business. This space must be your primary workspace. So, if you have a physical office, you may not qualify for a home office deduction. Entries for the home office are entered into the Schedule C as Business Use of Home. Direct expenses are expenses that are directly related to the portion of the home set aside as your workspace. Indirect expenses would be expenses allocated to the entire home. For example, your real estate taxes would be an indirect expense since they are for the entire home. However, if you have a separate phone line for the home office only, you could classify the utility payment as a Direct Expense.
You can review this Business Use of Home for further information.
10. Half of the taxes you pay on your return for self-employment are deductible on your tax return. The program will automatically calculate that amount for you.
11. The cost of business meals with your clients can be listed as an expense on your return if the purpose for the meeting was to conduct business or generate income. Meals for real estate agents would be listed under the 50% deduction as opposed to the 80% deduction for Department of Transportation employees.
12. Professional meetings or conferences are considered to be tax deductible on your Schedule C. These would include costs to attend the seminar, travel/lodging expenses and 50% of meals while away from home overnight to attend the business meeting.
13. Continuing Education courses are a normal expense for real estate agents. This can be deducted on the Schedule C as Other Expenses.
14. Office Rent can be listed as a General Expense on the Schedule C. However, if you work from home and qualify for the Home Office Deduction, you can claim a portion of the home mortgage interest and real estate taxes on the Business Use of Home form. You can also depreciate the portion of the home used for business use.
15. Insurance for your business is deductible on the Schedule C. This would include insurance on your office space, business insurance, and errors and omissions insurance.
16. Basic office expenses such as pencils, pens, paper, envelopes, postage, ink, etc. are considered to be Office Expenses on the Schedule C.
17. If you are a Self-Employed individual, you are responsible for securing your own Health Insurance. If you qualify, the deduction is considered an adjustment to income and is claimed on the 1040 rather than the Schedule C. To qualify, your business must show a net profit for the year and the insurance plan must be established under the business. Expenses paid for you, your spouse and your dependents qualify for the adjustment.