Realtors can deduct any business expense that’s both regular and necessary to create a profit, according to the IRS. Normally, realtors may deduct advertising expenses, professional and licensing fees, educational expenses, a portion of the expenses connected with the business use of the homes and any automobile expenses associated with business use.
Advertising
Business cards, open house flyers,”for sale” signs, newspaper ads and other types of advertising can usually be deducted as business expenses. Advertising encourages you to be contacted by people for business, which may lead to a profit. Since most real estate brokers must market to generate real estate leads that lead to sales, advertising prices are both regular and necessary, which means for a tax deduction.
Professional and Licensing Fees
Fees charged by attorneys consulted rigorously in regard are tax-deductible, according to the IRS. Prices for attorneys or tax preparers may be tax-deductible on tax returns just. Some realtors decide to combine with the National Association of Realtors or any of its affiliated chapters to elevate their public standing by adhering to a strict code of ethics. Prices of membership may be. The cost of renewing and obtaining a real estate license may be.
Educational Costs
Coursework to renew or obtain a license may be. The IRS requires evidence that any seminars, classes or workshops enhance skills or are required by law to maintain your license in order for those expenses to be tax-deductible.
Home Office
Mortgage interest, homeowner’s insurance, utilities, repairs and depreciation for the portion of the house converted into a house office are eligible for a business expense tax deduction. All expenditures need to reflect the percentage of their home used as a workplace, whether the office is a separate space or a section of a space screened away from the remainder of the house. Another telephone line dedicated to the business may also be deductible.
Automobile stinks
Most real estate brokers use the exact same automobile for business and private use. Automobile expenses should be divided based on mileage. For instance, say a real estate broker’s total annual mileage is 45,000 miles, however, just 25,000 miles were utilized to preview and show properties, hold open houses and attend meetings. The percentage of business use would be 55 percent. If total automobile costs for the year equaled $15,000, just $8,250 would be tax-deductible. Some realtors prefer to choose the standard mileage deduction, which can be 50 cents per mile for 2010. That means $12,500 may be tax-deductible for automobile expenses.