Mileage Logs for Real Estate Agents

Last updated on: February 21, 2024

As a realtor, using your vehicle for business purposes uses up a huge amount of your miles. Regardless of whether you are driving a potential future homeowner to 5 different locations on a Sunday or going to get snacks for your open house, these trips will all be tax-deductible for you as you drove your car for business purposes.

What is Mileage Deduction?

Mileage deduction is a tax-saving mechanism that allows you to deduct vehicle expenses incurred for business-related travel from your taxable income. The IRS recognizes that as a real estate agent, you’re often on the move – showing properties, meeting clients, and attending industry events. These miles add up, and so does your potential for savings!

Let’s dive into how using a mileage log for real estate agents can transform your business expenses into significant deductions.

Why a Realtor Mileage Tracker is Essential

As someone in the real estate small business world, you’re constantly on the move. Whether it’s client meetings, property showings, or attending industry events, every mile can add value to your tax deductions. That’s where a realtor mileage app comes into play. It’s not just about recording miles; it’s about ensuring every eligible mile counts towards your mileage deduction.

Choosing the Right Mileage Tracker App

The market is flooded with options, but what makes for the best mileage tracking app? Here’s what to look for:

1. Ease of Use: You want an app that’s intuitive and simple.
2. Automatic Tracking: The best mileage tracker apps automatically record your trips.
3. Detailed Reporting: Look for apps that provide detailed reports suitable for tax purposes, especially when it comes to complying with the stringent IRS-regulations.

FAQs About Realtor Mileage Apps

• Q: How do I ensure accuracy with a mileage tracker?
  • A: Regularly review and categorize your trips in your realtor mileage app to ensure all business-related travel is accurately captured.
• Q: Are there free options available?
  • A: Absolutely! There are free mileage tracker apps that offer basic features, however, the trade-off might be something you might want to avoid in the long run.

The Benefits of a Business Mileage Tracker

Using a business mileage tracker not only helps you deduct mileage efficiently but also keeps you organized. You’ll have a clear record of your vehicle expenses, which is essential when claiming the standard mileage rate on your taxes.

Maximizing Your Mileage Deduction

To make the most out of your mileage deduction, consistency in logging is key. With a reliable mileage app, like a free mileage tracker, you can effortlessly track every business trip. Remember, even short distances can add up over time, significantly impacting your deductions.

In conclusion, as a real estate agent, adopting a mileage tracker app is a smart move for your business. Not only does it simplify the process of logging vehicle expenses, but it also ensures you’re maximizing your mileage deductions. So, choose the right mileage app for your needs and start turning those miles into money-saving opportunities!

How much is the standard mileage rate?

The IRS announces a standard mileage rate every tax year that taxpayers can use to calculate their vehicle expenses for tax deduction purposes.

The 2023 standard business mileage rate is 65.5 cents/mile, which can quickly add up to a considerable amount in tax deductions, which means more money in your wallet. And don’t forget, for this year’s counting you should use the recently updated rates.

Although it greatly depends on the average miles driven per year,  the annual business mileage for a realtor is around 7,000 – 10,000 miles a year. This means a tax deduction of several $1,000s on average.

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FAQs for Real Estate Agents About Mileage Deductions:

• Q: What trips count as business-related?
  • A: Any travel directly connected to your real estate business counts. This includes driving to showings, property inspections, client meetings, and even trips to the office supply store for business needs.
• Q: Can I deduct mileage for my commute?
  • A: Commutes from home to your primary office are generally not deductible. However, trips from your office to other business locations are deductible.
• Q: What records do I need to keep?
  • A: For the standard mileage rate, log the date, miles, and purpose of each trip. For the actual expense method, keep receipts for all vehicle expenses in addition to your mileage log.

Let’s take a look at a specific example:

The 2022 standard mileage rate for business purposes is 65.6 cents/mile in 2023.

Let’s look at Emma for instance. She is a real estate agent who has had 5 clients looking for properties this month. Emma drives approx. 90 miles a day between properties and meetings. She hosts open houses, goes to realtor-sponsor lunches, and looks at potential “pocket listing” houses.

90 miles per day on average, for approx 300 days a year means that Emma drove 27,000 miles in a year for business purposes. Calculating for the whole year, Emma will be able to claim approx. $17,685 in tax deductions.

While you may drive more (or less) miles than Emma, it’s easy to see how this tax deduction is a successful realtor’s primary concern.

NOTE: If you prefer going with the Actual Expenses method instead of the standard mileage rate, you can deduct your car-related business expenses (like gas or auto insurance) in the ratio of your business trips – 90% business trips means that you’ll able to deduct 90% of your vehicle-related business expenses. It depends of your driving habits if this method is more worth it than the standard mileage rate.

“What do I do now?”

You need supporting IRS-Proof mileage logs to claim a vehicle mileage tax deduction. When your claim is audited, the Internal Revenue Service will expect you to have precise mileage logs, low or high mileage.

Your mileage log must include:

You’ve already claimed a tax deduction in a previous year and now you’re being audited for mileage?

MileageWise helps customers of different age groups on a daily basis who are being audited by the IRS (including many real estate agents, realtors or insurance agents) pass audits. Our mileage logging software has been designed to meet the strict requirements of the IRS and has been reviewed by IRS audit experts to ensure they are compliant.

TIP: More info about the IRS mileage reimbursement rate and the calculation methods (car allowance, fixed and variable costs, etc.)

If realtors choose to take the standard mileage deduction, they can get a significant amount of money that they earned by driving for business.

Want to know the average business miles claimed on taxes annually? An average miles per year calculator can be used to calculate a rough estimate of how many miles you drive per year.

Did you forget to record your trips in the past as a Google user?

Then you’re very lucky because if you have Location History turned on in your Google account, even if you have 1000+ trips/month, you can transform them into an IRS-Proof mileage log via MileageWise.

Take advantage of your 14-day free trial, and try all of our unique features.

You will see for yourself that by creating IRS-Proof mileage logs in 7 minutes/month and saving yourself from the consequences of inaccurate mileage logs, MileageWise becomes the best deal for your dollar on the mileage log market.

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Check out the new video to MileageWise’s mileage tracker mobile app:

…and its accompanying Web Dashboard platform: