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What You Can and Cannot Deduct For Advertising Your Real Estate Business

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deductRealtors and real estate agents rely a great deal on advertising and promotions to build their business and keep it going strong. Almost any kind of advertising is tax deductible for a real estate business, as long as the expenses are ordinary, necessary, and within reason. However, there are some advertising expenses are not tax deductible. Before you start combing through your advertising budget for deductions and talking to your virtual bookkeeper, use this handy checklist to help you keep track of tax deductible advertising expenses.

Basic Tax Deductible Expenses for Small Businesses and Real Estate Agents
  • Business cards
  • Brochures
  • Flyers
  • Signs for storefront or vehicle
  • Yellow page advertisements
  • Internet advertisements
  • Magazine advertisements
  • Radio and/or television commercials and advertisements
  • Website set-up and maintenance
  • Fees paid to web developers, graphic designers, public relations agencies, and other people or businesses you paid to help you promote your company
  • Print materials promoting your business
  • Balloons, decorations, refreshments, and other items used at open houses
  • Billboards
  • The cost of staging a home to increase its appeal to buyers (Raylynn, does this make sense? Would you consider this advertising?)
Tax Deductible GoodWill Advertising Ideas

If it relates to your real estate business and you expect to gain in the future, you can deduct “goodwill” or institutional advertising meant to keep your name before the public. Examples of goodwill advertising for realtors include:

  • Sponsoring a youth sports team such as Little League baseball or soccer
  • Advertisements (print or online) that encourage people to donate to specific charities
  • Donating money to local school events or causes
  • Walking in a parade to promote your business and handing out Frisbees, t-shirts, or other materials with your business’ name on them
  • Giving away products or samples
  • Holding contests and giving away prizes
Tax Deductible Promotional Giveaway Items

Structuring giveaways correctly can be tricky, but beneficial for your real estate business. Giveaway items that you use to publicize and promote your business are tax deductible. A few common items realtors give away include:

  • Pens
  • T-shirts
  • Tote bags
  • Keychains
  • Mousepads
  • Magnets
  • Coffee Cups
  • Calendars

Advertising Expenses You Can’t Deduct as a Realtor

  • Permanent signs for your business. Signs that will last less than a year (cardboard signs or banners) can be deducted, but permanent signs are considered a business expense and can be depreciated from year to year, but cannot be deducted as an advertising expense
  • Advertisements to influence government legislation
  • “Help Wanted” ads are not considered advertisements, but can be deducted as operating expenses
  • Time and labor put into the creation of a giveaway and distribution of products
  • You cannot deduct more than $25 worth of “gifts” per recipient, per year
  • Expenses that are primarily personal, even if they promote your business. For example, you can invite your best customers to your child’s wedding, but you cannot deduct the cost of the wedding because your clients came

There are thousands more tax deductible real estate business expenses than listed here. Have a question about a deduction for your real estate business? Mazuma can help you answer it.

 

Other posts that might interest you:

How to Legally Structure a Real Estate Partnership or Agency

How to Track & Separate Business and Personal Expenses as a Realtor or Real Estate Agent

The Top 10 Tax Deductions for Realtors and Real Estate Agents

Top 4 Tips on Tracking Mileage and Deducting Vehicle Expenses as a Real Estate Agent

6 Ways to Save Time and Money on Bookkeeping and Accounting as a Realtor or Real Estate Agent

How to Calculate Self-Employment Taxes for Real Estate Professionals and Agents

How Do I Figure My Estimated Quarterly Taxes? For Realtors, Real Estate Brokers, and Property Managers

How to Develop an Exit Strategy for Your Real Estate Agency Partnership

How to Develop a Succession Plan for Your Real Estate Partnership

 

Ben Sutton

Ben Sutton

Ben Sutton is the founder of Mazuma USA, an accounting firm providing tax, bookkeeping and payroll services to small businesses. Since founding Mazuma, Ben has established himself as an expert in the small business world. He’s still driven by that same desire to provide accounting help to all small businesses – from photographers, bloggers and creatives to lawyers, doctors, and dentists, everyone needs affordable accounting help. Ben is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. But Ben considers his greatest achievement and credential to be his happy wife and four children.

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