Year-End Tax Tips for Real Estate Agents
The busy season never really ends for real estate professionals. Listings, showings, and closings run right into year-end, which is exactly when smart tax planning can protect your income.
Use this year-end tax tips guide to tighten your records, line up deductions, and position yourself for a smooth tax filing.
1) Know your status and structure: Your filing status and business entity affect almost every decision you make in December.
Sole proprietor or single-member LLC. Report net income on Schedule C. You may qualify for the Qualified Business Income (QBI) deduction if you meet income limits.
S corporation or multi-member LLC. Confirm reasonable compensation, officer payroll, and year-end distributions. Make sure bookkeeping is clean so K-1s are accurate.
Team leaders and broker-owners. Review how assistants, showing agents, and marketing support are paid. Anyone you paid $600 or more for services likely needs a Form 1099-NEC.
OBBBA / HR1 note: Recent federal legislation, referenced as OBBBA and HR1, includes updates that affect small business deductions, such as QBI, bonus depreciation, and charitable giving. Several provisions start now, while others phase in over the next filing seasons.
2) Lock in your biggest day-to-day deductions: You already spend on marketing, travel, and client care. The goal is to make every legitimate dollar count, including:
Vehicle costs. Choose standard mileage or actual expenses. The right answer depends on how much you drive, your vehicle type, and the quality of your recordkeeping. Keep a mileage log that shows date, purpose, start and end miles, and destination.
Home office. If you use a dedicated space regularly and exclusively for business, you can use the simplified method or actual expense method for rent, mortgage interest, utilities, and insurance allocations.
Phone, data, and software. Deduct the business portion of your cell phone, CRM, e-signature tools, virtual tour and scheduling apps, and transaction management platforms.
Marketing and listing prep. Photography, drone services, floor plans, staging rentals, print ads, boosted posts, signage, lockboxes, and MLS dues are ordinary and necessary business expenses.
Client gifts. The long-standing $25-per-recipient federal limit still applies to gift deductions. Branded swag that primarily advertises your business may be handled as advertising rather than gifts. Track both carefully.
Meals. Some business-related meals can be fully deducted in 2025 under specific exceptions, such as:
o Restaurant meals from July 4, 2025, through December 31, 2026, received a temporary reinstatement of a 100% deduction. This temporary exception applies to meals that otherwise meet business expense requirements.
o Company-wide events, such as holiday parties, annual picnics, or other recreational and social activities, are 100% deductible if they are primarily for the benefit of all employees.
o Meals included as employee compensation are deductible by the employer, and the employer can deduct them in full if the cost of the meal is treated as taxable wages to the employee.
o Promotional meals: When food and drinks are made available to the public, such as free samples or meals at a sales presentation, they are 100% deductible.
3) Equipment, technology, and improvements: Many tangible assets, like cameras, lighting, laptops, and office furniture, can be expensed up to annual limits if placed in service by December 31. Recent legislation references have adjusted phase-outs and limits. Coordinate purchases so they qualify in the correct year and choose the method that maximizes your deduction without creating a planning headache later.
4) Health insurance and retirement planning: These levers create tax savings and build long-term security.
Self-employed health insurance. Premiums may be deductible against business income if you are not eligible for an employer-subsidized plan through a spouse.
Retirement plans. A Solo 401(k) allows employee deferrals and employer contributions up to annual limits. You generally must establish the plan by December 31 to make salary deferrals. SEP-IRAs can often be opened and funded by the tax filing deadline. Run contribution modeling now to hit the sweet spot.
5) Estimated taxes and cash flow: Avoid penalties and surprises.
Revisit quarterly estimates using year-to-date profit and any large Q4 closings. Aim to meet safe harbor rules or your current-year liability.
Set aside funds for self-employment tax, not just income tax. High-commission months can distort your effective rate if you only reserve for federal and state.
6) Tri-state considerations to keep on your radar. Rules differ across New York, New Jersey, and Connecticut. A few items many agents ask about:
New York City. Certain unincorporated businesses with activity in NYC may be subject to local business taxes and filings. There are also credits and exemptions that may reduce or eliminate the bill.
MCTMT. If you are self-employed within the Metropolitan Commuter Transportation District and your net earnings exceed set thresholds, the Metropolitan Commuter Transportation Mobility Tax can apply.
State addbacks and decoupling. NY, NJ, and CT sometimes take positions different from federal rules on itemized deductions, SALT limits, and depreciation.
7) Recordkeeping that holds up. Good documentation turns “probably deductible” into “safely deductible.”
Keep invoices and receipts tied to categories in your bookkeeping software.
Save closing statements and commission reports. Tie back large expenses to specific listings or campaigns when possible.
Use a separate business bank account and card. Commingling is the fastest way to lose deductions in an audit.
Snapshot your mileage, home-office square footage, and equipment inventory each December.
8) Team leaders and broker-owners: If you run a team or brokerage, add these to your list.
Year-end 1099-NEC collection for independent contractors. Make sure W-9s are on file now.
Payroll true-up reports for S corporation owners. Confirm reasonable compensation and officer health insurance reporting.
Prepaid expenses. Depending on your accounting method, prepaying certain costs, like advertising, web hosting, or insurance, can accelerate deductions.
9) Charitable giving and timing: Consider donor-advised funds if your income is spiky and you want to group multiple years of giving into one high-income year. Recent regulation references include changes to charitable deductionmechanics and percentage limits, with some provisions scheduled to shift in future years. If you are planning a large gift, ask us whether bunching or waiting a few months would change the tax outcome.
Next Steps
Use this checklist to wrap things up.
This week
Recalculate Q4 estimated taxes and set aside cash.
Choose the mileage vs actual vehicle method for the year and update logs.
Gather W-9s from all vendors you paid $600 or more.
By December 15
Decide on equipment and tech purchases to place in service before December 31.
Confirm entity payroll items like reasonable comp if you are an S corporation owner.
Finalize Solo 401(k) plan establishment if you want to make employee deferrals for this year.
By December 31
Make charitable gifts you want counted for this year.
Close out client gifts with proper tracking of amounts and recipients.
Take a photo or export of your odometer reading and update your home office measurements.
Early January
Reconcile bank and card accounts for December.
Produce 1099-NECs to vendors by the deadline.
Schedule a tax projection call to incorporate any OBBBA or HR1 updates that affect this filing season and next year’s strategy.
Plain English
Real estate is a unique business. We translate the rules into plain English, build a plan that fits your needs, and keep you compliant across federal and tri-state requirements. If you want a quick year-end review, a retirement plan setup, or an entity tune-up, we can also help you choose the moves that matter.
Have questions about your specific situation?
Reach out to LMJ CPAs for a consult and a personalized year-end action plan.