Can I deduct the realtor association fees,the MLS website membership charge and the error insurance from my taxes although I don any income from realstate this year?

[labibsalama]

I have another job with w2 but want know if I can deduct the cost of my real estate side job that didn't get income as of yet although I am employed at a local broker.

Also wanted to know if I can deduct will the deluxe work for kt

[MinhT · Accepted solution]

Yes, if you are a real estate agent (even part-time) you can deduct these costs as business expenses even if you did not have any income in 2017.

You'll need to upgrade to TurboTax Self-Employed to report these costs.

[sumodog123]

Are you sure that is correct? I thought that real estate expenses can only be used against real estate earnings unless they are considered an RE professional. He stated he hasn't earned any commission yet. 

Real Estate Professional Test. To qualify as a real estate professional, a taxpayer must satisfy the following tests: Perform more than 50% of services in real property trades or businesses (“50% test”), and. Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)

[SusanY1]

Yes, this is correct.  When actively employed and working as a real estate agent, one is considered a professional even if commissions haven't been earned yet.  The hours/percentage of income test does not apply in the case of working as a real estate agent.  

The definition listed above applies in the context of rental income from propety and its associated expenses, which is reported on Schedule C rather than Schedule E when it is received by a real estate professional as defined above.   

@sumodog123 

[sumodog123]

Thank you for the quick response. So in my case, I work full time as a software engineer but I have my real estate license. I pay association dues and fees to my broker but I didn't have any RE income this year but will have some in 2024. So I can pay those dues this year and write it off my 2023 SE income instead of waiting until Jan 1st to pay them so I can write it off of the RE income? @SusanY1 

[SusanY1]

You can write the dues off in 2023 if you can pay them before the end of the year (such as a credit card payment made online today.)  

You may have other expenses to claim as well.  Some of those may be considered capital start-up expenses (more information is available about that HERE).  Your dues may be considered a start-up expense depending on facts and circumstances.  They would be a start-up expense if you're not actively working as an agent (showing homes, meeting with potential sellers, etc.) and a regular business expense if you are, even when you are not yet earning commissions. 

There is plenty of real work that goes into being a real estate agent before that first commission check is earned!  Along with that work comes myriad expenses - many of which are deductible.   You can deduct anything that is an ordinary and necessary expense for your business.  Be sure to include mileage, business supplies (signs, paper, business cards, ink, etc.), advertising, insurance, training, communication expenses, seminars, etc.   

We have some tips for our real estate agent customers HERE.  I encourage you to look over this article for additional tax-saving ideas and, of course, come back to post additional questions here any time!