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Claim Your Share of the Tax Breaks for Realtors

As a realtor, you work hard to earn a living by helping clients buy and sell properties. While your income is often tied to commissions from successful transactions, it's easy to overlook the tax breaks that can help reduce your taxable income. However, these deductions can add up quickly and provide a significant reduction in your tax liability.

Maximizing Your Tax Benefits: A Guide for Realtors

As a realtor, you're likely no stranger to the 10-20% commission-based income model. While this structure provides a clear incentive for closing deals, it also means that your earnings are heavily reliant on sales performance. However, by claiming tax breaks specific to the real estate industry, you can reduce your taxable income and improve your bottom line.

Deductions Every Realtor Should Know​

  1. Business Use of Home Office: If you work from home or have a dedicated office for client meetings, you may be able to claim a portion of your rent or mortgage interest as a business expense.
  2. Travel Expenses: Keep track of travel costs related to showing properties or attending industry events. These can be deducted as business expenses on your tax return.
  3. Advertising and Marketing Costs: Any advertising or marketing expenses, such as website maintenance or social media promotions, can also be claimed as business deductions.
  4. Professional Fees: Payments made for professional services, like accounting or legal advice, related to your real estate business are deductible.
  5. Office Expenses: Cost of office supplies, equipment, and software used in your business operations may be deducted.

Special Considerations for Realtors​

  • As a self-employed individual, you're required to set aside 25-30% of your income for federal income taxes. This includes contributions to your own retirement plan or SEP IRA.
  • You may also be eligible for the Earned Income Tax Credit (EITC) if your adjusted gross income falls within the prescribed limits.

Consulting a Tax Professional​

While these deductions can provide significant tax savings, navigating the complexities of real estate taxes requires professional guidance. Consult with a certified public accountant or enrolled agent who specializes in real estate and self-employment taxation to ensure you're claiming all eligible deductions and staying compliant with IRS regulations.