Updated
Most agents are paid on commission and pay their own way: the car, the dues, the signs, the photos, the closing gifts. That makes the expense side of the return large, and it makes records matter more than usual. Here is what agents typically deduct and what the IRS expects you to keep.
What can real estate agents write off?
Generally, the ordinary and necessary costs of running your real estate business. The common ones:
| Expense | How it's usually treated | Watch out for |
|---|---|---|
| Car: showings, listing appointments, inspections, closings | Standard mileage rate or actual expenses, business share only | Commuting from home to your regular office isn't deductible |
| MLS fees, board and association dues | Generally deductible business expense | Social and country club dues are not |
| License renewal and regulatory fees | Schedule C line 23 covers licenses and fees paid to state or local governments | |
| Continuing education | Generally deductible: it maintains skills in your current work | Pre-licensing courses usually aren't |
| Brokerage desk fees, transaction fees, E&O insurance | Generally business expenses; business insurance goes on Schedule C line 15 | Fees taken out of your commission may already reduce reported income; ask your CPA |
| Marketing: signs, listing photos, ads, website, CRM, lead services | Generally deductible | |
| Staging you pay for | Generally a marketing expense of your business | If the seller reimburses you, it isn't your cost |
| Client gifts | $25 per person per year | See below |
| Meals with clients | Generally 50% | Entertainment, such as event tickets, isn't deductible |
| Cell phone | Business-use share | Keep a reasonable basis for the business percentage. (Home landline: the first line's basic service is personal, Pub 587.) |
| Home office | Simplified ($5 × up to 300 sq ft) or actual expenses | Exclusive and regular use required |
| Conference and convention travel | Travel, lodging, 50% of meals | Family members' travel isn't deductible |
These are general rules; how they apply to you is a question for your CPA.
How does the car deduction work for agents?
You deduct business miles at the IRS standard rate or the business share of actual car costs. For tax year 2026 (returns filed in 2027), the business rate is 72.5 cents a mile from January 1 to June 30, 2026, and 76 cents from July 1, 2026, after the IRS raised it in Announcement 2026-11. For 2025 it was 70 cents. Because the rate changed mid-year, your 2026 log needs miles split at July 1. The 2026 mileage guide walks through it.
Publication 463 is strict about commuting: driving between home and your regular place of work is personal. Driving from the office to a showing, then to an inspection, is business. If your home office qualifies as your principal place of business, Publication 463 says daily trips from home to another work location in the same business can be deductible. For car expenses, Publication 463 expects a record of mileage for each business use and total miles for the year, kept at or near the time.
How do the $25 client gift rules work?
IRS Publication 463 says you can deduct "no more than $25 for business gifts you give directly or indirectly to each person during your tax year." A gift to a client's spouse or family is generally treated as a gift to the client. If you and your spouse both give gifts, you're treated as one taxpayer.
Two details help agents:
- Incidental costs such as engraving, packaging, insuring and mailing generally don't count toward the $25, as long as they don't add substantial value.
- Branded giveaways costing $4 or less, with your name permanently imprinted and handed out widely (pens, notepads), aren't treated as gifts for the limit. Signs and display material used at the recipient's business also aren't.
Packaged food or drink you give for later use is treated as a gift; tickets you attend with the client are entertainment, which is generally not deductible.
Example: an agent closes 14 transactions and gives each buyer a $90 housewarming basket, plus $12 shipping each. The baskets total $1,260, but the gift deduction is generally limited to 14 × $25 = $350. The $168 of shipping is an incidental cost and generally deductible on top. A smaller closing gift often loses little or nothing to the cap.
Can agents deduct conference and convention travel?
Generally yes, if attending benefits your business. Publication 463 says you can deduct travel to a convention "if you can show that your attendance benefits your trade or business," and that the agenda generally shows the purpose. Keep the agenda or program. Your family's travel costs aren't deductible.
The normal travel rules apply: you have to be away from your tax home overnight, lodging is your actual cost, and meals are generally 50%. If you add vacation days, see business travel deductions.
Can a realtor take the home office deduction?
Yes, if part of your home is used exclusively and regularly for your business, and it's your principal place of business or where you meet clients. IRS Publication 587 allows a simplified method of $5 per square foot for up to 300 square feet, or actual expenses on Form 8829. A desk in the guest room that guests also use generally doesn't qualify. More in the home office deduction guide.
What records should real estate agents keep?
Publication 463 asks for amount, time, place and business purpose; for gifts, the cost, date, description and business relationship. In practice:
- A mileage log: date, start and end, miles, purpose (showing, listing, closing), split at July 1, 2026
- Bank and card statements for every business account
- Receipts for lodging (always), gifts and meals of $75 or more, and invoices or receipts for other business purchases
- A gift list: recipient, date, what you gave, cost, transaction it relates to
- MLS, board and association invoices
- License renewal and continuing-education receipts
- Marketing and staging invoices, and which listing each was for
- Conference agendas and travel receipts
- Your brokerage's annual commission statement and any 1099s
Where Amy fits
An agent's expenses live in the car, the phone and a long tail of small charges for the trade. Text Amy the receipts as you go, and she finds the rest in the records you already have and tells you what's missing. Your CPA sees the source behind every line and makes the call.
