The tax codes allow for business owners to take deductions for legitimate business expenses. As a realtor, you are considered self-employed (that’s if you have not formed a partnership or corporation). As a self-employed individual, you are required to report your business income and expenses separately on a Schedule C.

So what’s deductible? Here are a few that might fit your situation:

Auto Expenses. As a realtor, one of the major expenses you can deduct is the business use of your vehicle. You may either deduct the standard mileage rate or the actual expenses for the amount of business use. It is very important that you keep a mileage log. Your mileage logs should document all your business use of your vehicle. The standard mileage rate for 2008 is a flat rate of 50.5 cents per mile from January 1 – June 30.  It was increases to 5.5 cents per mile effective July 1, 2008. If you don’t use the standard mileage rate, you may be able to deduct actual expenses including depreciation, insurance, lease payments, registration, repairs, tire purchases, gas, oil and license fees. Even if you opt to deduct the actual expenses, you are still required to keep a mileage log. The mileage log is what is used to determine the percentage of use. For example, if you drive 500 total miles in one week, 250 are business and the other 250 are personal, your percentage of use is 50%. You would be able to deduct 50% of your actual expenses.

Gifts. For new or returning clients, you may choose to offer new home or closing gifts. Please note that for each client, you may deduct up to $25 per client per year for these gifts.  Any thing above the $25 threshold is not deductible.

Meals & Entertainment. Business and entertainment expenses are deductible as well. Travel away from home for business, conventions, or conferences are considered deductible expenses. The costs involved with entertaining clients at restaurants or clubs are also deductible. Good recordkeeping is a vital part of establishing your claim for these expenses. It’s a good idea to include details about the involved parties and the business purpose of the expenses. These records are not necessary for preparing the return, but are needed for audit purposes.

Health Insurance. Self-employed individuals are entitled to a health insurance deduction. You can deduct 100% of the amount paid for medical and qualified long-term care insurance for you and your family in a plan established under your business.

There are many other legitimate deductions for Realtors, and we can work together to realize your tax savings. Avoid needless overpayment on your taxes and seek our professional advice.