1st the Chariot, now the Castle: Tax deductions for real estate agents
- January 27th, 2015
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Besides the stipulations surrounding the old chariot, there are tax deductions for real estate agents that are unique involving the old castle. Similar to tax deductions involving their work vehicle, because of the nature of the business, real estate agents usually optimize their time with a home office. When it comes to conducting business, as a real estate agent you are usually on the road and have minimal use for being in your broker’s office. But, having an at home office means you have to be prepared for the costs, or rather being prepared to minimize the cost to you. Now let’s get into the nitty-gritty.
The Home office’s tax deductions for real estate agents
The home office tax deductions for real estate agents applies whether you own or rent your home, so don’t think that you are left out for renting. In fact, a renter usually benefits more because they are able to deduct a portion of their monthly rent; a sizeable expense that is normally not tax deductible.
Most commonly overlooked tax deductions for real estate agents, surrounding their home office include;
- Percentage of renter’s or homeowner’s insurance
- Maintenance for home office
- Depreciation of home office equipment
- Property taxes
To better understand how each of these will be impacted it is best to get the specifics from your accountant.
The IRS has requirements for your home office in order to qualify. As an approved home office and get the tax deduction for real estate agents the home office will have to be used in one of the following ways:
- Exclusively and regularly as your place of business.
- Exclusively and regularly as a place where you meet and deal with clients in the normal course of your trade or business.
- A separate structure used exclusively and regularly in connection with your business that is not attached to your home.
- On a regular basis for certain storage use.
In order for the home office to qualify as a tax deduction for real estate agents, the portion of the house that is used as the home office must not be used for any other purpose. For example, if you converted the old den in your house to a home office, you could not also use that space as a workout room or family room.
Having an accountant prepare your taxes when utilizing a home office is crucial for getting full tax deductions. At JRH & Associates we specialize in all aspects of tax returns on Long Island. If you need help with your tax return, or home office tax deductions for real estate agents, call the tax professionals at JRH & Associates at (516) 794-5752! Stay tuned for our next blog about home office tax deductions and deductions for hiring the family.