Real Estate Agent Tax Deductions: Everything You Can Write Off on Schedule C

Real estate agents are almost always independent contractors, not employees of their brokerage. The brokerage provides a license to hang and sometimes office space, but the agent covers their own expenses, pays their own taxes, and reports income on Schedule C. This means every legitimate business expense reduces both income tax and self-employment tax (15.3% on the first $168,600 of net income for 2025, then 2.9% Medicare on the excess). An agent earning $150,000 in gross commissions who tracks $40,000 in deductions saves roughly $15,000 in combined taxes compared to an agent who reports the full $150,000 as profit.

How do vehicle expenses work for real estate agents?

Vehicle costs are typically the largest single deduction for real estate agents. For current guidance, see IRS Schedule C instructions. Agents drive to showings, open houses, client meetings, inspections, appraisals, closings, and property previews. The IRS allows two methods:

Standard mileage rate: Multiply business miles driven by the IRS rate (67 cents/mile for 2024, adjusted annually). Track every business trip in a mileage log (date, destination, business purpose, miles). Commuting from home to the office is personal, not business. Trips from the office (or home office) to clients and properties are business.

Actual expense method: Track all vehicle costs (gas, insurance, repairs, maintenance, depreciation, car payments/lease) and multiply by the business-use percentage. A vehicle driven 25,000 miles total, of which 18,000 are business, has a 72% business-use percentage. If total vehicle costs are $12,000, the deduction is $8,640.

For most agents, the standard mileage rate is simpler and often produces a higher deduction (particularly for agents who drive newer vehicles with high mileage). An agent driving 20,000 business miles deducts $13,400 at the 2024 rate.

What marketing expenses can agents deduct?

Real estate agents spend heavily on marketing, and nearly all of it is deductible under IRC 162:

Paid advertising (Google, Facebook, Instagram, Zillow, Realtor.com), direct mail campaigns (postcards, newsletters, “just sold” flyers), print advertising (local newspapers, magazines), signage (yard signs, banners, directional signs), professional photography and video production, virtual tour and 3D scanning costs, drone photography, staging costs (paying a staging company to furnish a listing), open house expenses (refreshments are 50% deductible as meals, signage and materials are 100%), website development and hosting, and business cards.

The cost of purchasing a geographic farming area (exclusive marketing rights to a neighborhood) is deductible if paid annually. If the agent pays a lump sum for a multi-year exclusive, the cost should be amortized over the period.

What about the home office?

Most agents work from home at least part of the time (making calls, preparing CMAs, managing transactions). The home office deduction under IRC 280A requires exclusive and regular use of a dedicated space as the principal place of business or as a place to meet clients.

The simplified method ($5/sq ft, up to 300 sq ft = $1,500) is easy and requires no record-keeping for home expenses. The actual method (percentage of rent, utilities, insurance, etc.) typically produces a larger deduction for agents who have a dedicated office in their home.

An agent who maintains a desk at the brokerage’s office can still claim the home office if the home office is used regularly and exclusively for administrative and management activities, and the brokerage office is not the agent’s principal place of business for those activities. Most agents who work from home the majority of the time qualify.

What about commission splits and team expenses?

Commission splits: If the 1099-NEC reports only the agent’s share of the commission (after the brokerage split), no separate deduction is needed for the split. If the 1099 reports the gross commission (before the split), the agent deducts the brokerage’s portion as a cost of goods sold or commission expense on Schedule C.

Team expenses: An agent who runs a team and pays team members (buyers’ agents, transaction coordinators, showing assistants) deducts those payments as either wages (if the team member is an employee) or subcontractor fees (if the team member is an independent contractor). If the team member is an independent contractor, the agent issues a 1099-NEC for payments of $600 or more.

Referral fees: Fees paid to other agents for referrals are deductible as business expenses. The agent paying the referral fee issues a 1099-NEC to the receiving agent if the payment is $600 or more.

Should agents consider the S-Corp election?

An agent earning above $80,000-$100,000 in net profit should evaluate the S-Corp election. The mechanics are the same as for any self-employed professional: the agent sets a reasonable salary, pays payroll tax only on the salary, and takes the remaining profit as a distribution exempt from payroll tax.

Real estate agents are SSTBs under IRC 199A (the activity involves “the performance of services that consist of investing and investment management, trading, or dealing in securities, partnership interests, or commodities” does not apply, but the “any trade or business where the principal asset is the reputation or skill of one or more employees or owners” catch-all does apply to some agents, though this is debatable and depends on the agent’s specific activities). Many practitioners take the position that real estate brokerage is not an SSTB because the agent is selling property, not providing consulting services. The issue is not settled, and agents should consult with a CPA about their specific situation.

Related guides:

• Entity structure for real estate agents, the S-Corp election math for agents earning $100K+ in net commissions
• Estimated tax payments for agents, the quarterly payment schedule and safe harbor rules for commission income
• Home office deduction for agents, how the deduction works even with a brokerage desk and why it unlocks business mileage
• Marketing deductions for agents, a deeper look at online ads, staging, direct mail, and lead generation platforms
• Retirement plans for agents, Solo 401(k) and SEP IRA options for self-employed agents
• Team structures for real estate agents, tax implications of commission splits, team employees, and partnerships
• 1099 reporting for real estate agents: commission income and splits
• Vehicle deductions for real estate agents: mileage vs. actual expenses

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.