I paid for one of those Mentor/Coaching programs to help me start my real estate investing business. Can I deduct these costs and if so where do I report them?

[stanz71]

Hello, I joined one of those mentoring/coaching programs to teach me how to invest in real estate and start my business.  Can I deduct these cost for my new business and if so, where do I report them in Turbo Tax?

[IsabellaG]

It depends.  In order to be deductible, your expenses must be for education that (1) maintains or improves your job skills in your current job or (2) is required by your employer or by law to keep your salary, status or job. However, even if the education meets either of these tests, the education cannot be part of a program that will qualify you for a new trade or business, or is needed to meet the minimal educational requirements of your trade or business.

You indicate that this was to start your real estate investing business, so it would appear that these expenses aren't deductible. But if you were already in business, and took these classes to improve your skills, this would be deductible as a business expense, which you can report using TurboTax Self-Employed.

[justinbenz]

Hello,

As an agent I only had one transaction last year. The brokerage sent my 1099 Misc showing my gross commission, but I don't know how to back that down to my AGI. The brokerage took 20% (of which I was obviously not paid). 

I was also part of a mentor program that took another 20%. 

Can you explain where/how to deduct this so I really only get taxed on money that I saw as income?

Thanks!

[DaveF1006 · Accepted solution]

You can deduct the brokerage commissions that were deducted as brokerage fees. Also you can take the fees that were charged for your mentor program you participated in. To report these,go to other miscellaneous expenses.  Here you will enter each expense as a description. So the first one would be brokerage fees and amount. right below that will be + ADD another row  here you can put in the fee for the mentor program.  

[sp1980]

Hi, 
So, I have had a rental property since 2018. I had not opening any LLC or DBA. I was reporting me income/expense on Schedule E.
In 2020, I signed up for the mentoring program to help me improve my stills. Program costs about $20K. Someone told me that I will need to file a Schedule C to take the deductions over a couple of years as only $10K/year? 
I have been using TurboTax Live Premier for the last few years. But, when I call for advise, it is hard to find someone with experience in Real Estate... 

Thanks 

[WendyN2]

Why the "E" versus the "C"? The Schedule E will phase out a certain amount of passive losses you might incur in writing down/off this mentoring program, whereas the "C" would not, thus somewhat "skewing" your bottom line. It really all depends on your true future intent.

It is definitely a "grey area" in accounting for the costs in that your hope is to eventually make this into a business. If this is truly the case, then yes you should start up a Schedule C - and amortize these costs over a 7 to 10 year period. You would enter this information in the "Depreciation and Amortization" section of the program - same area as the building and other assets - just in the amortization section and not the depreciation section. 

[sp1980]

Hello Wendy,
I was using TurboTab Premier with Expert support. I just answered the questions and TurboTax online did the taxes. For the first year I had an expert walk me thru the steps... May be I should switch to Self-employed option to get the schedule C option?  

Thanks

[WendyN2]

Yes, you should upgrade in order to get the full benefits of the program for the Schedule C and the details of what all (as a percentage of the totals) you can deduct on the newly created Schedule C. Remember, you can name it what ever you want - or just use your name. It is entirely up to you. I just wanted to let you know the two methods you have "at your disposal", so to speak. It is worth it to upgrade for this specific purpose that I had outlined for you, however. Glad I could help.