Quick answer: If an expense is ordinary and necessary for your real estate business, it’s deductible. The categories that matter most for agents are your vehicle, your home office, health insurance, retirement contributions, marketing, and dues — in roughly that order of dollar impact. Two things changed for 2026: the 1099 threshold for contractors you pay jumped from $600 to $2,000, and employer-provided meals lost their deduction entirely.
The thing to understand before the list: a deduction is worth more to you than to a W-2 employee. Business deductions reduce your net self-employment income, which cuts both your income tax and your 15.3% self-employment tax. For an agent in the 22% bracket, a $1,000 deduction is worth roughly $370, not $220. That’s why the small stuff adds up faster than people expect.
I teach continuing education classes on this for agents, brokerage offices, and the Miami Realtor Association across South Florida. The question I get most is some version of “can I write this off?” — so here’s the real list.
The four that move the needle
Most agents get the small deductions right and leave the big ones on the table. Start here.
Your vehicle. Almost always the largest single deduction for an active agent. Standard mileage or actual expenses, and for 2026 the rate changed mid-year — 72.5 cents through June 30, 76 cents after. This one has enough moving parts that it gets its own article.
Your home office. Deductible if you use a space regularly and exclusively for business. Two methods: the simplified option at $5 per square foot up to 300 square feet, capped at $1,500 — or the regular method, where you deduct your business-use percentage of rent or mortgage interest, utilities, insurance, and repairs. A 250-square-foot office in a 2,000-square-foot home is 12.5%; against $30,000 of home costs, that’s $3,750, well past the simplified cap. Renters qualify too.
The exclusivity requirement is real. A desk in the corner of the guest room counts. The dining table where the family eats does not.
There’s a second benefit people miss: a qualifying home office makes your house your principal place of business, which turns the drive to your first showing into a deductible business mile instead of a commute.
Health insurance. If you’re self-employed and not eligible for a plan through a spouse’s employer, premiums for you, your spouse, and your dependents are deductible above the line — you get it whether or not you itemize. Long-term care premiums count too, within age-based limits.
Retirement. The largest deduction most agents never take. For 2026, a SEP IRA lets you contribute up to 25% of compensation, capped at $72,000. A solo 401(k) allows $24,500 in employee deferrals plus employer contributions to the same $72,000 total, with catch-ups of $8,000 at 50 and $11,250 between 60 and 63.
The solo 401(k) usually wins for agents, because the deferral portion doesn’t depend on your income level — you can put in $24,500 even in a mediocre year, where a SEP would cap you far lower. It has to be established by December 31, though the funding can wait until you file.
The everyday list
These are the ones agents generally know about. Worth scanning for gaps:
- License renewal, MLS fees, association dues, lockbox and key fees
- Brokerage desk fees, split fees, franchise fees, E&O insurance
- Marketing — signs, riders, flyers, postcards, business cards, photography, videography, drone work, virtual tours, staging, floor plans
- Advertising — Zillow and Realtor.com leads, Google and Facebook ads, print, mailers
- Website, IDX feed, CRM, transaction management, e-signature, scheduling tools, cloud storage
- Phone — the business-use percentage of your bill, or the full cost of a dedicated business line
- Computers, tablets, printers, cameras, and software
- Continuing education, designations, coaching, conferences, and industry publications
- Client gifts, capped at $25 per recipient per year — a limit set in 1962 and never adjusted
- Business insurance, bank and merchant fees, business loan interest
- Professional fees — legal, bookkeeping, tax prep for the business portion of your return
- Open house costs — refreshments, supplies, signage
That list is easier to work through on paper. I keep a Real Estate Agent Deduction Checklist and matching tracking spreadsheets for clients and class attendees — details at the end.
Meals: 50%, and one thing that changed
A meal with a client, a prospect, a referral source, or a business contact is 50% deductible if you’re present and it isn’t lavish. Same for meals while traveling overnight for business, and food brought into a business meeting.
Entertainment is 0%. The ballgame, the golf round, the concert — nondeductible since 2018, no matter who you’re with or what you discussed. If you buy food at an entertainment venue, the meal is still 50% deductible only if it’s billed separately from the entertainment. Get the itemized receipt.
New for 2026: the One Big Beautiful Bill Act added Section 274(o), which eliminates the deduction for meals provided on your premises for your own convenience — the food you bring in to keep staff at their desks through a busy stretch. That was 50% deductible through 2025 and is now 0%. It mostly hits brokerages and agents with staff rather than solo practitioners, but if you feed a team, this line item changed.
Company-wide events like a holiday party remain 100% deductible.
Documentation matters here more than in any other category. Keep the receipt, and note who was there, their business relationship to you, and what you discussed.
Paying contractors: the $2,000 change
If you pay a photographer, stager, transaction coordinator, virtual assistant, or handyman, this is the biggest procedural change of 2026.
The threshold for issuing Form 1099-NEC rose from $600 to $2,000 for payments made on or after January 1, 2026 — the first change to that number since 1954. It indexes for inflation starting in 2027.
Three things before you relax about it:
- Still collect a W-9 before you pay anyone. You can’t know in March who’ll cross $2,000 by December, and chasing a W-9 in January from someone you no longer work with is miserable.
- The payment is still deductible below the threshold. Fewer forms doesn’t mean less deduction — it means less paperwork.
- Most states didn’t follow. State filing requirements may still sit at $600.
And if you’re on the receiving end: fewer 1099s arriving doesn’t reduce what you owe. Income is taxable whether or not a form shows up.
What isn’t deductible
The list agents most want to be wrong about:
- Clothing. Even the blazer you only wear to showings. The rule is whether it’s suitable for everyday wear, and business clothes always are. Branded uniforms are the narrow exception.
- Haircuts, gym memberships, cosmetic work, teeth whitening. Personal, regardless of how client-facing the job is.
- Commuting from home to your brokerage office, unless your home is your principal place of business.
- Entertainment, as above.
- The conference in Cabo where you attended one session. Travel is deductible when the primary purpose is business — and the IRS looks at how you spent the days.
- Time you donated. Volunteering at a charity event is generous, not deductible. Out-of-pocket costs may be.
If you have a PA (S-corp)
The deductions are the same, but the mechanics aren’t. Expenses you pay personally — mileage, home office, phone — shouldn’t sit on your personal return. They belong in a written accountable plan, where the corporation reimburses you and takes the deduction.
Without one, the reimbursements become taxable wages, and you can’t deduct them yourself, because the OBBBA made permanent the disallowance of miscellaneous itemized deductions. The deduction vanishes. This is the single most common error I see in agents who elected S-corp treatment and set it up without guidance.
The other half of getting an S-corp right is the number on your W-2. Set the salary too low and the deductions won’t save you — that’s the piece the IRS actually examines, and it’s covered in what counts as a reasonable salary.
One caveat worth knowing before you chase every last write-off: deductions reduce your net profit, and your 20% QBI deduction is calculated on that same profit. Every legitimate deduction is still worth taking — it just saves you a bit less than the sticker price suggests.
The mistakes I see every tax season
- A shoebox instead of a system. Separate business bank account and card, everything runs through it. That one change eliminates most of what goes wrong here.
- No system at all. If none of this is being captured as you go, start with the thirty-minutes-a-month setup before worrying about any individual deduction.
- Claiming a home office that isn’t exclusive. It invites scrutiny of everything else on the return.
- Missing the retirement deduction entirely because nobody set the account up by December 31.
- Deducting the whole phone bill on a phone the family also uses.
- Assuming the deduction only saves you your bracket rate, and under-investing in the business as a result. It saves you the bracket plus self-employment tax.
- Waiting until April to think about any of this. Deductions are a bookkeeping problem, not a tax problem, and by April the year is closed.
The bottom line
Run everything through a dedicated business account, track mileage as you drive, and get the four big categories right — vehicle, home office, health insurance, retirement. Those four are worth more than every small deduction on the list combined, and they’re the ones most often missed.
The deductions also determine what you owe on the quarterly payments coming due through the year, so getting them right earlier means funding less unnecessarily.
Over the years I’ve put together a Real Estate Agent Deduction Checklist and a set of tracking spreadsheets for exactly this — the checklist walks the categories above so nothing gets missed, and the spreadsheets give you somewhere to put the numbers as the year goes instead of reconstructing it all in April. They’re available on request. Email me at don@fallenbaumcpa.com and I’ll send them over.
Finding what an agent has been missing is most of what our tax services do in a first year, and our real estate practice exists because these deductions look different for agents than for other businesses.
If you’d rather have someone look at a full year of your numbers and tell you what’s missing, schedule a free consultation. In most first meetings I find something.
Don Fallenbaum, M.Acc, CPA/CFF/ABV, is the Principal of Fallenbaum CPA & Advisors, LLC in Plantation, Florida. Known as “The Real Estate CPA,” he has spent 25+ years serving Realtors, real estate brokerage offices, and real estate investors, and teaches continuing education classes on entity structuring and taxes for real estate professionals.
This article is for general educational purposes and isn’t tax or legal advice for your specific situation. Talk to a qualified professional before making decisions about your deductions.