As a transaction coordinator (TC) or realtor, understanding tax deductions can help you maximize your returns and reduce your taxable income. Below is a breakdown of commonly deductible expenses shared by professionals in the field.
1. What home office expenses can I deduct?
Hannah Fraser: “I work from home, so I write off everything that makes sense. This includes my phone bill, electric bill, internet bill, and the square footage of my office on my mortgage.”
✅ Solution: If you have a dedicated workspace at home, you may be eligible for home office deductions, including a portion of your rent/mortgage, utilities, and internet expenses. Check IRS guidelines or consult a tax professional to ensure compliance.
2. Can I deduct professional development and licensing fees?
Hannah Fraser: “I deduct CE & study courses.”
✅ Solution: Continuing education (CE), study courses, and certification fees are all tax-deductible as professional development expenses.
3. Are marketing and client-related expenses deductible?
Hannah Fraser: “I deduct ads and client gifts.”
✅ Solution: Advertising costs, including online and print ads, promotional materials, and business cards, are deductible. Client gifts are also deductible but may be subject to IRS limits (typically up to $25 per client per year).
4. What about software and tools needed for my job?
Hannah Fraser: “I deduct all programs I pay for (A Frame, Dotloop, cloud fees, etc.).”
✅ Solution: Any software subscriptions, transaction management platforms, and cloud storage fees related to your work can be deducted.
5. Can I write off travel expenses?
Hannah Fraser: “I deduct travel.”
✅ Solution: Business-related travel expenses such as mileage, airfare, lodging, and meals are deductible, provided they are incurred for work purposes.
6. What happens if I cover unexpected business expenses?
Hannah Fraser: “I paid for two pest inspections that didn’t make it onto ALTAs—mistakes I’ve paid for.”
✅ Solution: If you personally cover unexpected business-related costs, such as inspections or service fees, those may be deductible.
7. Are insurance and brokerage fees deductible?
Hannah Fraser: “I deduct E&O insurance and broker fees.”
✅ Solution: Errors & Omissions (E&O) insurance, general business insurance, and brokerage fees are all legitimate tax deductions.
8. Can I deduct office supplies and technology costs?
Hannah Fraser: “I deduct supplies and technology repair fees.”
✅ Solution: Any office supplies, including pens, paper, printer ink, and tech repair costs, can be deducted as business expenses.
Final Takeaways:
- Home office deductions apply if you have a designated workspace.
- Professional development expenses, including CE courses, are deductible.
- Marketing, client gifts, and software tools are valid write-offs.
- Travel, business insurance, and unexpected expenses may be deducted.
- Supplies, repairs, and brokerage fees are all considered business expenses.
Keeping detailed records and consulting a tax professional can ensure you maximize your deductions while staying compliant with tax regulations.
By structuring your tax deductions wisely, you can ensure that you’re not overpaying on your taxes while staying financially efficient in your real estate or TC business!