The IRS doesn’t publicize the average expense that Realtors claim for mileage when using a personal vehicle for work purposes. However, the amount of miles a Realtor drives and claims a deduction for will depend on the method they use for calculating the deduction and the number of apartments and houses they show each day.
Car Deduction Overview
If you work as a Realtor at a real estate firm, operate your own real estate business or even provide Realtor services as an independent contractor, you are eligible to claim a deduction every time you use your personal vehicle. The reason for the deduction is because the IRS views the use of your car as a business or job-related expense. For Realtors, most of the driving you do to take prospective buyers and renters to view properties will qualify for the deduction. Additionally, any time you drive to view new properties that come on the market or to even pick up office supplies, can be included. The IRS gives you two options for calculating your annual deduction.
Tracking Actual Costs
One method is to keep track of every dollar you spend on your car that relates to your realtor profession. You can deduct the actual cost of gas every time you go to the pump, the cost of oil, repairs, auto insurance and even some of the lease payments you make on the car. If you purchase the car, the IRS allows you to claim a depreciation deduction instead. However, just because you can include these expenses doesn’t mean they are 100-percent deductible. Since you use the car for personal use too, you must allocate your total car expenses between your deductible Realtor use and nondeductible personal use. One easy way to make this allocation is by keeping track of the miles you drive for work. You can calculate the percentage of your deductible car expenses using the ratio of miles you drive for the real estate business to the total miles you put on the vehicle.
The IRS provides Realtors with another easier way to calculate their deductible car expenses with the standard mileage rate. The rate is fixed at the beginning of each tax year, and in a sense, estimates the average cost you will incur for each mile you drive. To calculate your deduction, you simply multiply the mileage rate by the number of miles you drive for your real estate position. You are also free to calculate your mileage deduction using both methods and choosing the one that yields the higher deduction.
Reporting Realtor Mileage
The deduction calculation is the same for all taxpayers; however, the way you report it depends on how you operate as a Realtor. If you are an employee of a real estate firm, you include your mileage expenses with other itemized deductions. However, if you are an independent contractor or operate a real estate business as a sole proprietor, you can claim all mileage expenses on a Schedule C attachment to your 1040.
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- IRS: Business Structures; March 2011
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- IRS. "Travel, Gift, and Car Expenses," Page 4. Accessed Oct. 27, 2020.
- IRS. "Standard Mileage Rates." Accessed Oct. 27, 2020.
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- Congress. "H.R. 1," Page 1. Accessed Oct. 27, 2020.
- IRS. "Topic No. 502 Medical and Dental Expenses." Accessed Oct. 27, 2020.
Jeff Franco's professional writing career began in 2010. With expertise in federal taxation, law and accounting, he has published articles in various online publications. Franco holds a Master of Business Administration in accounting and a Master of Science in taxation from Fordham University. He also holds a Juris Doctor from Brooklyn Law School.