No matter what category you fall under—investor, real estate professional, or broker/dealer—real estate is likely still a business for you, and with that comes certain business deductions on your tax return that can be quite beneficial to you. These basic deductions are often overlooked by investors though.
Like with any home-based business, you can write off a portion of your utility bills and mortgage (based on the square footage of your work space). Additionally, you can usually write off such business expenses as cell or Internet service, fuel or gas mileage, subscriptions to industry publications, membership fees to networking or professional organizations, office supplies, and more.
According to the IRS, Section 162(a), “There shall be allowed as a deduction, all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.”
The terms “ordinary” and “necessary” are intentionally vague—they’re open to interpretation so work with your tax accountant about whether any expense is a truly viable deduction in your situation. As well, my book Run Your Own Corporation deals with home office and other business deductions you may want to use.