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Below is a list of professional expenses commonly incurred, and deducted, by realtors.  Remember, to be deductible, an expense must be both "ordinary" and "necessary" in connection with your profession.





Advertising expenses


The money spent to advertise a property, or to purchase give-aways. The value you put on your time spent showing homes and working open houses.
Automobile expenses


The portion of automobile expenses incurred while driving between two different workplaces, or between your principal residence and a temporary job site.  You can base the deduction on actual expenses incurred or on the standard mileage rate of $.445 per mile for 2006, increasing to $.485 per mile for 2007. The portion of automobile expenses incurred while commuting between your principal residence and a regular place of business.
Beepers and pagers 529 The rental fees paid by you for beepers and pagers used in connection with your employment. Any costs associated with the personal use of these items.
Cellular phones 534 The business portion of the cost of the cellular phone can be expensed.  Plus, you can deduct the business use portion of the monthly cellular phone bills. Any portion of the cost of the cellular phone and the monthly cellular phone bills relating to personal use.
Computer purchases 534 Depreciation on the business use percent of any computer or peripheral purchased (1) as a requirement of your employment and (2) for the convenience of your employer. Any computer and peripheral not specifically purchased as a requirement of employment or for the benefit of your employer.
Education, examinations and licenses 508 Expenses incurred that are required as part of your employment and maintain or improve your skills in your current profession. Expenses incurred that prepare or qualify you for a new trade or business, including taking classes to obtain your initial real estate license.
Gifts to Clients 463 Gifts with a value of less than $25 given to clients to congratulate them on the purchase of a new home. Birthday and wedding gifts given to colleagues and potential or former clients.
Home office 587 The percentage of your home (based on square footage) used regularly and exclusively in connection with your profession.  Great for renters since rent isn't otherwise deductible on your federal tax return. The portion of your home used for any non-business purpose during the year, even if just for one day.
Insurance 529 Errors and omissions insurance and insurance on business assets. Health, life and disability insurance.  Health insurance is deductible as an "adjustment to income" if you have net self-employment income.
Interest on school loans 535 Up to $2,500 of student loan interest paid during the year, subject to income limitations, is deductible as an "adjustment to income". Interest on school loans in excess of $2,500 per year.
Job search 529 Expenses associated with finding a new position in your current trade or business. Any expenses associated with finding your first job, or a job in a new trade or business.
Meals and entertainment 463 50% of the cost of a meal when there is a specific business purpose in connection with the meal, or while temporarily traveling on business. Personal meals, including meals while working within the general vicinity of where you live.
On-line Services 463 Internet access, website design and maintenance, and other on-line tools to help you in your profession. Personal e-mail accounts, and other personal use of the internet.
Parking and tolls 463 Parking and tolls incurred in connection with traveling  between two different workplaces or between your principal residence and a temporary job site. Parking and tolls incurred in connection with commuting between your principal residence and a regular place of business.
Professional dues, licenses and subscriptions 535 Fees paid to join professional organizations or to subscribe to their journals. Dues paid to social or athletic clubs.
Printing and postage 535 Amount paid to have brochures and other marketing materials printed and mailed. Postage spent on printing and mailing personal items.
Supplies 535 Supplies, such as give-aways and snacks for an open house, or toner cartridges and paper for your computer. Supplies that don't fall within the definition of "ordinary" and "necessary" for a professional in your field.
Travel and lodging 463 Travel and lodging expenses incurred while outside the general vicinity of your residence in connection with a deductible activity. Travel and lodging incurred when the primary purpose of the trip is not business related.
Uniforms and cleaning 529 The cost of purchasing and cleaning clothing, such as company shirts and jackets, required by your employer that isn't considered "everyday street clothing". Items such as suits, shirts, shoes, ties and wristwatches because they fit the description of "everyday street clothing".

IRS Pub indicates the IRS Publication that contains information on this topic.  You can access the IRS Pubs at

How to Deduct Your Unreimbursed Professional Expenses

How you deduct your allowable unreimbursed professional expenses depends on how you were compensated during the year:

  • Individuals compensated as employees (having taxes withheld from their pay) are required to deduct these type expenses as a miscellaneous itemized deduction on their Schedule A. These individuals will also be required to complete and attach a Form 2106 or 2106-EZ, Unreimbursed Employee Business Expense, to their Form 1040.
  • Individuals compensated as independent contractors (having NO taxes withheld) deduct their professional expenses directly against their income. These individuals will be required to complete and attach a Schedule C or Schedule C-EZ, Profit or Loss From Business, to their Form 1040.
  • Individuals compensated as both employees and independent contractors need to determine whether to reflect a specific expense on the Schedule C or the Form 2106. Items which are specifically related to a person's income as an independent contractor, such as errors and omissions insurance and directly related auto expenses, will be deducted directly against that income. Other items, such as job search expenses, are most likely related to a person's employment and should be reflected on the Form 2106.  800.471.0045  fax 800.547.3366  Email us at