Missed our July 10 webinar with CPA and tax whisperer Tim Gearty? We’ve got you! Here are the biggest takeaways from “How to Save Thousands in Taxes—Legally” so you can stop guessing on tax strategies for real estate agents and start saving. Whether you’re a rookie agent or a seasoned pro, here’s your cheat sheet for making smarter deductions, having fewer IRS headaches, and deducting celebratory bottles of champagne.
The webinar, moderated by Spencer Payne, Senior Director of Strategic Projects for Colibri Real Estate, covered real-world tax strategies for agents, including business deductions, vehicle write-offs, home office rules, audit triggers, and key changes from the newly passed “One Big Beautiful Bill.”
Potential Changes from the “One Big Beautiful Bill”
A new tax package is coming in hot. It’s called the One Big Beautiful Bill (OBBBA) (yes, really), and it will affect this year’s tax bill.
- Some provisions are retroactive to Jan 1, 2025; others kick in Jan 20 (the date Trump was sworn into office).
- One juicy highlight? SUVs get better tax treatment than sedans. Why? Bonus depreciation perks. Real estate agents who drive clients around: take note.
“There’s a little bit of an advantage now to SUVs. That was put in the Senate’s bill,” Gearty said.
Write It Off or Wave Goodbye
Let’s make it simple:
Advertising = Fully deductible
Gifts = Only $25 deductible… unless it’s also marketing.
Hack: Put your logo on that $80 champagne bottle or Cutco knife set, and boom, it’s a marketing expense and100% deductible.
Is your real estate tech deductible? If you use your phone, iPad, or internet 100% for work, deduct 100%. If it’s 50/50 personal/work? Only deduct half. (And no, you don’t need to time-track your TikTok usage. Just be reasonable, or you may raise a red flag.)
Mileage vs. Actual Car Costs
There are two ways to deduct your vehicle:
Standard mileage
- Deduct the IRS rate, which is around 70 cents/mile.
- PLUS: You can also deduct tolls and parking.
Actual expenses
- Add up car payments, insurance, gas, and maintenance.
- Once you have that figure, multiply by the business-use percentage.
“Be consistent,” Gearty warns. “If you’re claiming 100% business use, make sure your insurance policy says the same thing.”
Pro Tip: Putting your logo on your car won’t make it 100% deductible. Nice try, though.
Travel: Business or Pleasure?
Here’s how to handle business deductions if you’re traveling for a real estate conference and tacking on some R&R:
- Flights: Flights are deductible if the trip’s primary purpose is business.
- Hotel/Meals: Only deduct days related to the event.
- Family Expenses: Is your partner or family traveling with you? Their expenses are not deductible.
“Room costs are still deductible if your family shares with you, as long as you would’ve stayed in the room alone anyway,” Gearty said.
The Tax-Free Housing Jackpot
If you (or your client) recently sold a primary residence, there’s a major tax break you should know about. Married couples can exclude up to $500,000 in capital gains from taxes. Single filers get up to $250,000 tax-free.
Do you want to hear something even better? You can take advantage of this exclusion multiple times, as long as the home was your primary residence for at least two of the last five years before the sale.
Do you have a widowed client? There’s a special rule for them, too. If they sell the home within two years of their spouse’s passing, they can still claim the full $500,000 exclusion. After that window closes, the exclusion drops to $250,000.
“That’s a potential $50,000 tax savings just by knowing the timing rules,” Gearty said.
Common Audit Triggers Agents Should Watch Out For
Some real estate agents and small business owners miss out on valuable tax deductions simply because they’re afraid of triggering an audit. But knowing what raises red flags and how to defend your deductions can make all the difference.
- Claiming 100% business use of your car? Make sure your insurance policy reflects that. If the IRS sees personal-use coverage, they’ll question the deduction.
- Taking the home office deduction? That space must be exclusively used for business. A laptop on the kitchen table doesn’t count.
- Writing off bad debt? Under the cash method of accounting (which most agents use), you can’t deduct income you never actually received.
- Trying to claim hobby losses? That horse you bought for your weekend rides? Unless you’re running a legitimate equine business, it’s not deductible.
“IRS agents aren’t out to get you. If it’s an honest mistake, they usually charge interest but waive penalties,” Gearty said.
Starting Out with No Sales? You Still Win
Just getting started as a real estate agent and haven’t closed a sale yet? If you racked up $4,000 in legitimate business expenses, you can still take advantage of those deductions, even with zero income.
You’ll report the expenses on Schedule C, which lets you log business losses. These losses can be used to offset other income, such as your partner’s W-2 wages or any interest and dividend income you may have.
If your expenses exceed your income for the year, don’t worry. Those extra losses can be carried forward and used to reduce your taxable income in future years.
Real Estate-Specific Breaks to Know
- Home Office Deduction: You can claim a portion of your rent or mortgage if it’s a truly dedicated workspace.
- Business Clothes: Clothes are only deductible if they have your logo on them.
- Commuting: Nope. Driving from home to your brokerage isn’t deductible. But once you’re out showing homes? Game on.
Ready to Get Smarter with Your Money?
Real estate pros who understand their taxes make more money. You work hard to make your real estate business successful, so make sure you’re keeping more of your hard-earned commission.
Catch the full replay of the webinar and get the rest of Tim Gearty’s expert advice, real-life scenarios, and tax hacks you won’t hear anywhere else.
