Real estate agent tax deductions: the records to gather for Schedule C
By Arthur Teboul, DokuTrak · Published
In brief
Tax deductions for realtors come from the business side of the license: broker desk fees, MLS and board dues, licensing, marketing, car use and client gifts. This checklist lists the record behind each one, from Form 1099-NEC to the showing log, in the order a preparer works through Schedule C.
The checklist: Realtor records by Schedule C line: commissions to showings
Use one copy per real estate agent and tax year. Start with the brokerage paperwork, then work down to the personal side, and write "n/a" next to anything that does not apply.
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Build your own list: Answer 10 yes-or-no questions and the tax document checklist generator combines the lists that apply into one checklist.
Brokerage and commission records
- Form 1099-NEC from the brokerageOne per brokerage over that year’s line
- Brokerage year-end commission statementGross commission, split and every fee withheld
- Disbursement or settlement statement for each closingShows your share of each commission
- Independent contractor agreement with the brokerageSigned copy in force during the year
- Referral fees paid and receivedWith the other real estate agent’s W-9 and any 1099-NEC
License, dues and broker charges
- Desk, franchise and transaction fee statementFrom the brokerage, for the full year
- E&O insurance premium invoicePaid directly or charged by the broker
- License renewal and continuing education receiptsState fees and course invoices
- Association, board, MLS and lockbox dues invoicesKeep the line showing any lobbying share
Marketing and client costs
- Signs, riders, photos, video and staging invoicesOne per vendor or listing
- Ads, postcards, website, CRM and lead subscriptionsInvoices or card charges for the year
- Client and closing gift receiptsWith the name of each recipient
- Meal receipts with clientsNote who attended and the deal discussed
Car, office and equipment
- Showing and listing logDate, address, purpose, miles; 2026 kept in two halves
- Odometer readings at the start and end of the yearOr the day the car began business use
- Last year’s Form 4562 for the carIf you use actual costs and depreciate the car
- Parking and toll receipts for business tripsNot parking at your regular office
- Home office square footage and home billsOffice and total home size; rent or interest, utilities
- Phone and internet billsWith the business share noted
- Equipment invoices: laptop, camera, tabletWith the purchase date of each item
Personal side of the return
- Business bank statementsEvery month, to match deposits to commissions
- QBI inputs for Form 8995Schedule C profit, spouse’s income, any QBI loss carried over
- Health insurance premium statementsMonths with no employer plan available, for Form 7206
- Retirement plan and estimated tax recordsSEP-IRA or solo 401(k) contributions; each quarterly payment
- Time log, if you also own rentalsHours in real property businesses for the year
- Last year’s tax returnFull copy, with Schedule C and the asset schedule
Why a real estate agent files Schedule C
A real estate agent who works under a broker is often not an employee for federal tax. A qualified real estate agent is a licensed real estate agent paid on sales rather than hours, under a written contract that says they will not be treated as an employee (26 U.S.C. 3508). Such a real estate agent is not an employee, and the broker is not their employer (26 U.S.C. 3508).
So the first paper to ask for is the independent contractor agreement with the brokerage. It shows the split, the fees the broker charges, and the clause that makes you self-employed. With it in the file, the income goes on Schedule C and the business costs come off it.
A real estate agent who also owns rentals has a second question. For the passive loss rules, a real estate professional is someone who spends more than half their working time and more than 750 hours a year in real property businesses where they materially take part (IRS Publication 925). A license alone does not meet that test, so keep a time log if it matters.
Commissions, splits and the forms that report them
Commissions usually come through the brokerage, which reports them on Form 1099-NEC. A brokerage that paid you $1,200 of commission in 2025 had to send one, but the same $1,200 paid in 2026 sits under the new $2,000 line (Forms 1099-MISC and 1099-NEC instructions, 2025) (Forms 1099-MISC and 1099-NEC instructions (rev. 12/2026)). The 1099 contractor checklist lists every form and threshold by year. Every commission is income, with or without a form.
The 1099 is rarely the full story. Some brokerages report the gross commission and charge their fees back. Others report only the net. Ask for the brokerage year-end statement and the disbursement statement from each closing, so the preparer can see the gross commission, the split and every fee taken out.
Referral fees work both ways. If you paid another real estate agent a referral fee, keep their Form W-9 and any 1099-NEC you sent them. If you received one, it is income even when it arrives as a separate check.
Realtor expenses and the record behind each
The table lists the costs a real estate agent pays to keep the license active and to win listings, and the paper that proves each one.
| Expense | Rule to know | Record to keep |
|---|---|---|
| Desk fees, franchise and transaction fees, E&O | Ordinary business costs on Schedule C (IRS Publication 334 (2025)) | Brokerage fee statement for the year |
| License renewal, MLS, lockbox and board dues | Deductible as business costs; lobbying costs are not (IRS Publication 334 (2025)) | Dues invoices, with any lobbying share shown |
| Client and closing gifts | No more than $25 per person per year (IRS Publication 463 (2025)) | Receipt and the name of each recipient |
| Meals with clients | Generally 50% deductible (IRS Publication 463 (2025)) | Receipt, who attended and the business discussed |
| Signs, photos, staging, ads, website, CRM | Ordinary business costs (IRS Publication 334 (2025)) | Invoices and subscription statements |
| Laptop, camera, lockboxes, small gear | Expensed or depreciated; the de minimis rules are on the small business page | Invoice with the date of purchase |
Driving to showings: the log that holds up
Car use is often a real estate agent’s largest cost, and the one most often lost for want of a log. Showings, listing appointments, inspections and closings all count, while the drive from home to a regular office is commuting (IRS Publication 463 (2025)). For example, a log line might read “office to Oak Street listing, buyer showing,” with the date and the miles.
The business rate was 70 cents a mile for 2025 (IRS mileage rates). A 2026 log needs two totals, since the rate rose at midyear, and the mileage log checklist sets out both 2026 rates and how to price each half. Lockbox runs and sign drops count too, so log them as you go.
A phone and an internet plan often serve the business and the household at once. Keep the bills and note the business share, with a short reason. Do the same for a tablet or a camera used for both listings and family photos.
The QBI deduction, clothing and the owner side
A real estate agent can usually take the qualified business income deduction, figured on Form 8995 from Schedule C profit (IRS, About Form 8995). Brokerage services count as a specified service field, but the rules say that excludes real estate agents and brokers (26 CFR 1.199A-5). So a high-earning real estate agent’s deduction is not phased out as a specified service business, the way a consultant’s can be (26 CFR 1.199A-5).
Clothing is a frequent question. The IRS states its test for performing artists: clothing must not be suitable for everyday wear (IRS Publication 529). A suit or blazer you could wear outside work does not pass that test, so ask your preparer before claiming it.
Self-employed health insurance is the premium cost you pay for your own cover, figured on Form 7206 for months with no employer plan available to you or your spouse (Form 7206 instructions (2025)). Add retirement plan statements and the quarterly payment confirmations. If you work through an S corporation, the file changes: you bring a W-2 and a Schedule K-1 instead.
Questions people ask
Is a real estate agent self-employed for taxes?
Usually yes. A licensed real estate agent paid on sales rather than hours, under a written contract saying they are not an employee, is not treated as an employee for federal tax (26 U.S.C. 3508). The income and costs then go on Schedule C.
Can realtors deduct closing gifts?
Yes, up to a limit. You can deduct no more than $25 for business gifts to each person during the tax year (IRS Publication 463 (2025)). Keep the receipt and the name of the client who got each gift.
Can realtors deduct clothing?
Rarely. The IRS test, stated for performing artists, is clothing that is not suitable for everyday wear (IRS Publication 529). Business attire you can wear elsewhere, such as a suit for showings, does not meet it.
Do realtors qualify for the QBI deduction?
Usually, yes. The regulations exclude real estate agents and brokers from the brokerage services field, so their income is not limited as a specified service business (26 CFR 1.199A-5). The deduction is figured on Form 8995 (IRS, About Form 8995).
Is a real estate agent a real estate professional for tax purposes?
Not by default. That status needs more than 750 hours a year and more than half of your working time in real property businesses you materially take part in (IRS Publication 925). Keep a time log if you also own rentals.
Sources
- 26 U.S.C. 3508: A licensed real estate agent paid on sales output under a written contract is not treated as an employee.
- IRS Publication 925: A real estate professional performs more than half of personal services and more than 750 hours in real property businesses.
- IRS Publication 463 (2025): The $25 business gift limit, the 50% meal limit, and commuting.
- IRS Publication 334 (2025): Deductible business expenses and the bar on lobbying expenses.
- Forms 1099-MISC and 1099-NEC instructions (rev. 12/2026): For tax years beginning after 2025, the Form 1099-NEC threshold is $2,000.
- Forms 1099-MISC and 1099-NEC instructions, 2025: For 2025, Form 1099-NEC reported payments of $600 or more.
- IRS mileage rates: The business standard mileage rate for 2025 is 70 cents a mile; 2026 has two rates.
- IRS, About Form 8995: Form 8995 is used to figure the qualified business income deduction.
- 26 CFR 1.199A-5: The field of brokerage services covers securities brokers and does not include services provided by real estate agents and brokers.
- IRS Publication 529: Qualified performing artists can deduct theatrical clothing that is not suitable for everyday wear.
- Form 7206 instructions (2025): No deduction for any month you were eligible for a subsidized plan of your or your spouse’s employer.
About the author
Arthur Teboul (Founder, DokuTrak) is building DokuTrak after watching professionals lose hours chasing clients for documents over email. Arthur Teboul.
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How this page was made (methodology): it is built from the primary sources listed under Sources, and every rule and figure on it links to the source it comes from. Last updated October 25, 2026. Spotted an error or a rule that changed? Contact us.
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