Tax Tip for Real Estate Professionals and Travel Expenses

Tax Tip Podcasts & Blog Posts for Realtors, Brokers, Real Estate Professionals
Travel Expenses

General Rule for Deducting Realtor/Broker Travel Expenses: A self-employed Realtor/Broker generally can deduct the expenses of travel while away from home in the pursuit of a Real Estate trade or business, as long as the expenses are properly substantiated (Code Section 162(a)(2)). For years before 2018 and after 2025, an employee can deduct unreimbursed travel expenses as a miscellaneous itemized deduction to the extent such expenses exceed 2 percent of the taxpayer’s adjusted gross income. For year 2018 – 2025, no such deduction is allowed (Code Sections 62(a)(2), 67(g)). Additionally, no deduction is allowed for amounts that are lavish or extravagant. In other words, to the extent Realtor/Broker travel expenses are deductible, they are deductible only to the extent they are reasonable in amount (Code Section 162(a)(2); Regulation Section 1.162-2(a); Commissioner v. Flowers, 326 U.S. 465 (1946)).

The purpose of the Realtor/Broker travel expense deduction is to provide relief to taxpayers whose business or employment requires them to incur duplicate living expenses (Tucker v. Commissioner, 55 Tax Court 783 (1971).

The deduction of travel expenses is subject to certain limitations and substantiation rules (see Tax Tip for Real Estate Professionals – Travel Substantiation Rules).

For additional discussion of the tax treatment of meals and lodging paid by an employer where the meals and lodging are furnished for the convenience of the employer (see Tax Tip for Real Estate Professionals – Meals and Lodging Paid by an Employer).

Brenda Fitch Real Estate Professional
Brenda Fitch Real Estate Professional

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(Updated 04/11/2021 07:20)

Published by Don Fitch, CPA

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