The Deductions Most Agents Miss

Everyone knows about mileage. But there’s a longer list of write-offs that agents routinely leave on the table:

• MLS and board fees — your annual MLS subscription, local board dues, and any multiple listing service access fees
• Lockbox and key fees — Supra eKEY, SentriLock, or whatever system your board uses
• Marketing and advertising — Zillow Premier Agent, Facebook ads, Google Ads, print mailers, open house signage, branded materials
• Staging costs — if you’re paying for staging out of your commission (which many listing agents do), that’s a business expense
• Vehicle mileage — the IRS standard rate for 2025 is 70 cents per mile. Driving between showings, open houses, closings, and your brokerage office all counts. Your commute from home to your main office does not.
• Client entertainment and gifts — closing gifts are deductible up to $25 per client per year. Meals with clients are 50% deductible when there’s a clear business purpose.
• Continuing education — license renewal courses, CE credits, designations like CRS or ABR
• E&O insurance — errors and omissions coverage, whether your brokerage requires it or you carry your own policy
• Open house expenses — refreshments, printed flyers, door hangers for the neighborhood

The surprise: many agents don’t deduct their cell phone bill. If you use your phone for business (and every agent does), the business-use percentage is deductible. Same for your internet at home if you work from a home office.

Entity Structure for Real Estate Agents

Most agents start as sole proprietors, filing Schedule C under their personal return. That works fine early on. But once your net earnings pass roughly $50,000–$60,000, an S-corporation election starts to make financial sense.

With an S-corp, you pay yourself a reasonable salary (subject to payroll taxes) and take the rest as distributions (not subject to self-employment tax). On $150,000 of net income, the SE tax savings from an S-corp structure can be $8,000–$12,000 per year. There are setup and payroll costs, so run the numbers before making the switch — but for most producing agents, it’s worth it.

Your brokerage will need to issue your 1099 to your LLC/S-corp instead of to you personally. Some brokerages handle this smoothly; others are less familiar with it. Either way, it’s standard and perfectly legal.

Commission Income and Estimated Taxes

Since real estate commissions arrive as 1099 income with no taxes withheld, you’re on the hook for quarterly estimated tax payments. The deadlines are April 15, June 15, September 15, and January 15. Miss them and the IRS charges an underpayment penalty, calculated quarter by quarter.

The simplest approach: set aside 30–35% of every commission check in a separate savings account and make quarterly payments from there. That buffer keeps you from scrambling in January when Q4 estimates are due and holiday spending has thinned your checking account.

How to Track It All

A shoebox of receipts won’t cut it. We recommend a bookkeeping system — QuickBooks Self-Employed, Wave, or a simple spreadsheet at minimum — that categorizes expenses as they happen. The IRS expects contemporaneous records, meaning you logged the expense around the time it occurred, not in a panic the week before your tax appointment.

For mileage specifically, use MileIQ or a similar app that tracks trips automatically. The IRS can and does disallow mileage deductions when the taxpayer can’t produce a log.