Tax Write-Offs for New Brokerages: The Complete List

2026-08-21

Discover the full list of tax write-offs for new brokerages, including startup costs, marketing, tech, and more. Save money with this practical guide.

Starting a new brokerage comes with significant upfront costs, but many of those expenses can reduce your tax bill. The IRS allows you to deduct ordinary and necessary business expenses, and for a brokerage, that includes everything from office rent to CRM software. This guide lists the complete set of write-offs you should track from day one, with realistic figures and steps to claim them.

Startup Costs

Before your brokerage officially opens, you incur costs that are partially deductible. The IRS treats startup costs as capital expenses, but you can deduct up to $5,000 in the first year, with the remainder amortized over 180 months. This limit phases out dollar-for-dollar once your total startup costs exceed $50,000.

Deductible startup costs include:

Market research and feasibility studies
Advertising for the grand opening
Training for new agents (before opening)
Legal and accounting fees for business setup
State licensing fees (e.g., real estate broker license, typically $100-$500)
Office lease deposits (not the rent itself, but the deposit is deductible if non-refundable)

Keep receipts for every expense in your first year. If your startup costs exceed $50,000, consult a CPA to maximize the amortization schedule.

Office Rent and Utilities

Your physical office space is a major deduction. If you rent a commercial space, the full rent is deductible, as are utilities like electricity, water, and internet. For 2026, commercial rent in suburban areas averages $1.50-$3.50 per square foot per year, depending on location. A 1,000-square-foot office might cost $1,500-$3,500 per month.

If you work from home, you can use the simplified home office deduction: $5 per square foot, up to 300 square feet, for a maximum of $1,500 per year. Or you can use the actual expense method, which requires tracking home-related costs like mortgage interest, property taxes, and utilities, then multiplying by the percentage of your home used exclusively for business.

Marketing and Advertising

Marketing is essential for a new brokerage, and it’s fully deductible. This includes:

Website design and hosting: $500-$5,000 for initial design, $20-$50/month for hosting
Social media ads (Facebook, Instagram, Google Ads): $500-$2,000/month typical for new brokerages
Print materials (business cards, flyers, brochures): $100-$500 per batch
Signage for your office: $500-$2,000
Sponsorships for local events: $250-$1,000 per event

Track all marketing expenses separately, as they are a common audit target. Keep invoices and proof of payment.

Technology and Software

Your brokerage runs on tech, and most of it is deductible. Common software costs include:

CRM (Customer Relationship Management) like Follow Up Boss or kvCORE: $50-$150/month per user
Transaction management software (e.g., Dotloop, Skyslope): $25-$75/month
Email marketing tools (Mailchimp, Constant Contact): $20-$100/month
Accounting software (QuickBooks): $30-$50/month
Cloud storage (Google Drive, Dropbox): $10-$20/month

Hardware like laptops, monitors, and phones are also deductible. If you buy a laptop for $1,200, you can either deduct the full cost in the year of purchase under Section 179, or depreciate it over 5 years. Section 179 is often better for new businesses because it gives an immediate deduction.

Professional Fees and Insurance

You’ll need professional help and insurance, both of which are deductible:

Legal fees for contracts and compliance: $200-$500/hour, or retainers of $1,000-$3,000/month
Accounting and bookkeeping services: $200-$500/month for ongoing support
Errors and omissions (E&O) insurance: $500-$1,500/year per agent, depending on state and coverage
General liability insurance: $300-$800/year
Workers’ compensation (if you have employees): varies by state, but budget $500-$2,000/year

These fees are ordinary and necessary for running a brokerage, so they pass the IRS test.

Vehicle Expenses

If you drive to showings, meet clients, or run errands for your brokerage, you can deduct vehicle expenses. You have two options:

Standard mileage rate: for 2026, the IRS rate is $0.67 per mile (projected, based on 2025’s rate). Keep a log of business miles.
Actual expenses: deduct gas, oil, repairs, insurance, and depreciation, but only for the percentage of business use.

For most new brokerages, the standard mileage rate is simpler and often yields a larger deduction. For example, if you drive 1,000 business miles per month, that’s $670 per month, or $8,040 per year.

Continuing Education and Training

Real estate agents need ongoing education to maintain licenses, and these costs are deductible. This includes:

Pre-licensing courses (if you haven’t already): $300-$800
Continuing education (CE) courses: $50-$200 per course
Designations like CRS, ABR, or GRI: $500-$2,000
Seminars and conferences: $500-$2,000, including travel and lodging

If you train your agents, the cost of training materials and instructor fees are also deductible.

Employee and Agent Costs

If you hire staff or independent contractors, many costs are deductible:

Salaries and wages (W-2 employees): fully deductible, including payroll taxes
Commissions paid to agents: fully deductible, but ensure they are 1099 contractors if they meet IRS criteria
Health insurance premiums for employees: deductible as a business expense
Retirement plan contributions (e.g., SEP IRA): up to 25% of compensation, with a cap of $69,000 for 2026

For independent contractors, you must issue 1099-NEC forms if you pay them more than $600 in a year.

Travel and Meals

Business travel is deductible, but meals are only 50% deductible. This includes:

Airfare, hotels, and rental cars for out-of-town business trips
Meals with clients or agents: 50% of the cost is deductible
Local transportation (Uber, parking, tolls)

Keep detailed records of the business purpose of each trip and meal.

Miscellaneous Deductions

Don’t overlook these smaller write-offs:

Bank fees and merchant processing fees: $50-$200/month
Postage and shipping: $20-$100/month
Office supplies: $50-$200/month
Business phone and internet: $50-$150/month
Dues to real estate associations (e.g., NAR, local board): $500-$1,500/year
Subscriptions to MLS (Multiple Listing Service): $50-$500/month, depending on your market

FAQ

Can I deduct my home office if I also have a commercial office? No, you can only deduct a home office if you use it exclusively and regularly for business, and you cannot deduct it if you have a separate commercial space that you use for the same business. If you have both, you must choose one as your principal place of business.

What is the best way to track expenses for tax write-offs? Use accounting software like QuickBooks or Xero from day one. Connect your bank accounts and credit cards, and categorize every transaction. Also, keep digital copies of receipts using apps like Expensify or Shoeboxed. This makes tax time easier and reduces the risk of missing deductions.

How long do I need to keep records? Keep all tax records, including receipts and logs, for at least 3 years from the date you file your return. If you underreport income by more than 25%, the IRS can go back 6 years. For startup costs, keep records for the entire amortization period plus 3 years.

Can I deduct the cost of my real estate license? Yes, the cost of obtaining and renewing your real estate broker license is deductible as a professional fee. This includes the application fee, exam fee, and any fingerprinting or background check costs.

The bottom line

Starting a brokerage is expensive, but the tax code offers many write-offs to offset those costs. Focus on tracking every expense from day one, especially startup costs, marketing, technology, and vehicle use. Use accounting software to stay organized, and consult a CPA who specializes in real estate to ensure you’re maximizing your deductions. With proper tracking, you can reduce your taxable income significantly in your first year, giving your new business more cash to grow.