Real estate agent tax deductions: What you can write off 

What counts as a tax deduction for real estate agents?

The IRS counts expenses for real estate agents (and other business owners) as tax deductible if they are both necessary and ordinary.

“Necessary,” by the IRS’s definition, means that the expense must be something that’s helpful for your business, not strictly critical, like the word “necessary” implies. Advertising is a great example of this. It may not be essential for making the final sale, but it is helpful because it drives new clients to your business.

The IRS defines “ordinary” as something common for your line of work. As a real estate agent, ordinary expenses for you may be things like mileage, insurance, and home office expenses. But, if you suddenly started writing off something out of the ordinary, like clown makeup, oversized shoes, and curly wigs, you may have some further explaining to do to the IRS.

Good bookkeeping is key for real estate agents. Keeping track of not only what you spend but also documenting why can be a game changer if the IRS ever asks for more information.

Please note: The IRS only allows you to write off business deductions if you are classified as an independent contractor (as most real estate agents are) rather than an employee. If you get a W-2 from your employer, you do not qualify for business deductions.

Writing off mileage and vehicle expenses

 As a real estate agent, you can write off on-the-job mileage and vehicle expenses.

Real estate agents are always on the go. Whether you’re driving clients around to look at real estate listings or driving yourself to a closing, client meeting, real estate conference or for any other business purpose, make sure that you keep a close log of your mileage. This way, you can claim every mile you drive for work.

Here’s what you should take note of for each trip:

• The date
• The total mileage
• The destination
• The business purpose
• The odometer readings at the beginning and end

In addition to mileage, you can write off other vehicle expenses, too, including:

• Fuel, oil, and other fluids
• Repairs and maintenance
• New tires
• Registration fees
• Garage and parking fees
• Tolls
• Car washes
• Auto loan interest or lease payments

The IRS does not allow you to write off a few other expenses, including:

• Tickets for things like parking illegally or speeding
• The principal portion of your car payment
• Mileage for personal driving

With so much time spent traveling, mileage and vehicle expenses can really add up for real estate agents. Prioritize detailed bookkeeping to stay on top of expenses and ensure you maximize your deductions when you file.

Standard mileage rate vs. actual vehicle expenses

You can calculate your mileage and vehicle expenses using one of two methods: the standard mileage rate or the actual expenses method.

Standard mileage rate

The simplest way to calculate your mileage and vehicle expenses is to do so using the standard mileage rate, which was 72.5 cents per mile from January 1, 2026, to June 30, 2026, and is 76 cents per mile for July 1, 2026, to December 31, 2026. All you have to do is multiple your business mileage by the rate to calculate your deduction.

The IRS updated its standard mileage rate this year due to rising gasoline prices. So, make sure that you keep a separate mileage log for each rate period.

Maintenance and repairs are built in when you use the standard mileage rate. However, you can still write off your auto loan interest separately.

Actual expenses method

The actual expenses method is a bit more complicated, because it involves keeping track of and deducting your actual expenses for the year, based on how much you use the vehicle for business.

Let’s say, for example, that you use your vehicle 60% of the time for business and 40% of the time for personal. That means you can deduct 60% of your total expenses for things like fuel and oil, maintenance and repairs, car insurance, registration fees, and lease payments. Plus, you can write off 100% of expenses that are completely for business, like parking fees or tolls.

How do you choose?

In general, if you drive an older or lower value vehicle, put a lot of business miles on your car every year, and don’t rack up a lot of maintenance or repair bills, the standard mileage rate is the more advantageous choice. On the other hand, if you have a new or more expensive vehicle, higher insurance, maintenance, and repair costs, and don’t put in a ton of business miles, the actual expenses method generally yields a bigger deduction.

It’s important to choose carefully because if you own your vehicle and choose the standard mileage rate method the first year you use it for business, then you can choose between the standard mileage rate or the actual expenses method starting in year two. However, if you choose the actual expenses method during the first year, you are locked in to using it for the life of the vehicle.

Why? Because the standard mileage rate builds depreciation in. Whereas, with the actual expenses method, you deduct depreciation separately based on your vehicle’s value. If the IRS allows you to switch to the standard method after taking the actual expenses method, you could double dip on the depreciation you claim.

Writing off home office expenses

You can write off home office expenses if you use part of your home exclusively and regularly to do business, including:

• Rent or mortgage interest
• Homeowners or renters insurance
• Utilities, like internet
• Home repairs or maintenance
• Property taxes
• Depreciation (if you own your home)

Just like with the mileage and vehicle expenses write-off, you can choose between one of two methods when calculating your home office deduction: the simplified method or the actual expenses method.

The simplified method

Just like the name implies, the simplified method is the easiest way to calculate your home office deduction. With the method, you’ll multiply the square footage of your home office (max of 300 sq. ft.) by $5, with a maximum possible deduction of $1,500 for 2026.

The actual expenses method

The actual expenses method is a bit more complicated, because it requires you to keep track of your actual expenses throughout the year, and calculate a percentage of your indirect expenses (expenses that impact the whole house) based on how much of your home you use for business.

For example, let’s say you own a home that is 1,500 sq. ft., and your home office is 200 sq. ft. That means you can deduct 13% of your mortgage interest, property taxes, utilities, repairs, etc.

Once you calculate your indirect expenses, then add 100% of your direct expenses, which are expenses for only the office space itself. This might include new paint, flooring, a dedicated business phone line, etc.

How do you choose?

In general, if you have a smaller home office and want to keep it simple when it comes to calculating your deduction, the simplified method is a great option. On the other hand, if you have a bigger office space, or have higher housing costs, you may benefit more from the actual expenses method.

Writing off marketing and advertising costs

As a real estate agent, you can write off the costs of marketing and advertising for your business, including:

• Yard signs, open house signs, and other signage
• Business cards
• Search and social media ads
• Website design, hosting, and maintenance
• Postcards and direct-mail campaigns
• Email and text message marketing
• Drone footage
• Virtual staging
• Print ads

Keep all your invoices, receipts, and other documentation for marketing and advertising throughout the year organized in one place. A bit of bookkeeping as you go will ensure you have everything you need to calculate your deductions accurately, as well as to back up your claim if the IRS ever comes asking.

Writing off licensing and professional fees 

You may write off the costs of getting and keeping your real estate license, as well as any other professional fees necessary for your business, including:

• MLS (Multiple Listing Service) dues
• Local, state, and national association dues, like National Association of REALTORS (NAR) membership
• Background check and fingerprinting fees
• Legal fees related to your business
• Accounting or bookkeeping fees
• Notary fees

All the professional fees and dues can really add up for real estate agents. That’s why it’s so important to keep track of your receipts and documentation from the start. The last thing you want is to be scrambling for critical documentation when it’s time to file.

Writing off commissions paid to other agents or staff

You can write off commissions you pay to other agents, co-brokers, and staff who help you close deals as expenses on your tax return. This is an important one if you work as a team with other agents or real estate professionals.

Don’t forget, if you pay anyone $2,000 or more in a single year, you’ll need to file a 1099-NEC, Nonemployee Compensation, to report how much you paid them.

And, as always, make sure that you keep detailed notes about who you paid, how much, and when all year long, as well as other documentation, like invoices and payment receipts. This ensures you have everything you need to maximize your tax deduction and get every dollar you deserve.

Writing off insurance costs

 You can write off insurance premiums for plans that help protect you and your real estate business, including:

• Errors and omissions (E&O) insurance
• General liability insurance
• Health insurance premiums (if you're self-employed and not eligible for coverage through a spouse's employer)
• Business owner's policy (BOP) premiums
• Auto insurance (for the business-use percentage of your vehicle)

Make sure that you keep your policy and premium information organized throughout the year, so that it’s easy to find when it’s time to calculate your deductions.

Writing off continuing education and training

 You can write off the costs of the continuing education and training you need to keep your real estate license active, as well as any other training that could help you grow your business, including:

• Real estate designation and certification courses, like Certified Residential Specialist (CRS) or Accredited Buyer's Representative (ABR)
• Conference and seminar registration fees
• Coaching or mentorship program fees
• Books, online courses, and webinars related to real estate
• Membership fees for professional development programs

Basically, you can deduct any education costs that help you maintain or improve your skills as a real estate agent. If you are looking to branch out to something new, like getting your real estate broker’s license, you typically won’t be able to deduct the costs the same way.

If you’re unsure about whether continuing education or training is tax deductible, it never hurts to ask your local Jackson Hewitt Tax Pro.

Writing off software, tools, and CRM subscriptions 

As a real estate agent, you can write off subscriptions for the software and tools you need to run your business day to day, including:

• Customer relationship management (CRM) software
• Transaction management software
• E-signature platforms, like Docusign
• Website builders and design tools
• Graphic design software, like Canva
• Virtual tour or 3D imaging software
• Cloud storage subscriptions
• Accounting or bookkeeping software

If you use any of these tools or software for both business and personal use, keep in mind that you can only deduct a percentage based on your business use. That’s why it’s important to keep a close record of how you’re using each tool, in addition to keeping track of receipts and invoices.

Writing off travel, meals, and client entertainment

You can write off travel and meal expenses for business. The IRS has different rules for how each type of deduction works.

Travel expenses

If you travel for business to a real estate conference, training event, or anything else, you can write off the costs, including:

• Airfare, train, or bus tickets
• Hotel or lodging costs
• Baggage fees
• Rental car costs
• Taxis, rideshares, or public transit

If you’re combining business and personal travel, keep in mind that you can only deduct the business portion of your trip. That means you’ll need to separate your business and personal expenses, which requires diligent documentation and detailed bookkeeping.

Meals

You can generally write off 50% of business meals that you’re present for, including:

• Meals while traveling for business
• Meals with clients
• Meals with other agents or business contacts

When deducting meals, make sure that you take note of the cost, date, attendees, and business purpose of the meal in case the IRS asks you to back up your deduction later.

Client entertainment

The IRS no longer allows real estate agents (or any business owners) to write off entertainment, even if it’s part of your strategy to win over new clients. That means that any concert tickets, sports tickets, and golf outings don’t count as deductible. However, if a business meal is part of the outing, you can deduct 50% of the costs for that, but only if you separate the costs.

How to track deductions throughout the year

One of the biggest tax mistakes you can make as a real estate agent is waiting until it’s time to file to start getting your receipts and documentation together for your business deductions. With so many write-offs available to you, it’s much easier to keep track as you go.

Here are a few things you can do to make tracking your deductions throughout the year easier:

• Use bookkeeping software or services: You don’t have to track your deductions alone. Bookkeeping software can help you categorize expenses automatically, store digital receipts, and even generate reports. You can also work with a bookkeeping service that can do it for you.
• Open a separate bank account and/or credit card: Keeping your personal and business finances separate will make it much easier to spot deductible expenses and avoid confusion.
• Log mileage as you drive: Track your mileage for each trip in a notebook or a mileage tracking app as you go rather than trying to reconstruct trips later.
• Save and make digital copies of your receipts and invoices: You never know what you’re going to need! Digitize and organize all your business receipts and invoices in one place right when you get them.
• Note the business reason for every expense: Take a minute to jot down the business reason for any and all expenses, especially if it may not be an obvious expense for a real estate agent.
• Review your expenses every week or month: Time can really fly, particularly when you’re busy. Don’t let your expenses get away from you. Review and ensure you have them all in order on a regular basis, every week or month.

Good bookkeeping habits throughout the year can save you time, stress, and a big headache down the road. The better you are at keeping track of your expenses, the easier it will be to get every deduction and dollar you deserve when you file, and the more confident you’ll be if the IRS ever asks you to explain a deduction.

Standard deduction vs. itemizing: Which is better for agents?

The decision to take the standard deduction or itemize isn’t a factor when it comes to your deductible business expenses as a real estate agent. As long as you are an independent contractor, self-employed, or a business owner, you can deduct your ordinary and necessary business expenses on your Schedule C, no matter what you choose to do on your personal tax return.

However, when filing your personal tax return, you do need to determine which option is the most beneficial. The answer is the same for real estate agents as it is for anyone else: it depends on your situation and expenses. If you own your home and have many deductible expenses, itemizing is often the better choice; however, if you have fewer deductible expenses, taking the standard deduction may be smarter.

Your Jackson Hewitt Tax Pro is open all year to help with both personal and business-related tax needs. Don’t hesitate to reach out if you need help determining whether the standard deduction or itemizing is the better choice for you.

Understanding self-employment tax as a real estate agent 

The IRS considers most real estate agents to be self-employed, which means that it requires you to pay self-employment tax.

Self-employment tax is 15.3% of your net self-employment income and covers Social Security and Medicare. Employers cover half of these taxes, but when you’re self-employed, you’re on the hook for the entire amount.

For 2026, the IRS requires you to pay Social Security tax on the first $184,500 you earn, up to a maximum of $22,878. Once you cross that threshold, you stop paying Social Security tax on the rest. Medicare tax has no income cap, so you'll pay it on all your self-employment income. If you earn more than $200,000 as a single filer (or $250,000 as a joint filer), you’ll have an extra 0.9% Medicare tax on the amount over the threshold.

The good news is that, thanks to the many deductions available to real estate agents, you don’t have to pay self-employment tax on the full amount of your income. Writing off every expense that you can will help you keep more of your hard-earned money.

Don’t forget that you must make estimated quarterly tax payments throughout the year to keep up with both your income and self-employment tax obligation. Skipping these payments could mean a nasty surprise when you file, or even IRS penalties and interest on unpaid tax.

Take note: The only exception is real estate agents who are W-2 employees. If you get a W-2, you do not have to pay self-employment estimated tax payments, but you are also ineligible for business deductions.

With self-employment tax and a whole host of deductible expenses, tax time can be complicated for real estate agents. Don’t tax alone.TM Your local Jackson Hewitt office is open year-round, and your Tax Pro is always here to help. Find tax services near you, then walk in or book now.