The Real Estate Agent’s Guide to Managing Business Expenses
Introduction
Success in real estate isn’t just about how much you earn — it’s also about how much you keep.
Many agents focus on closing more deals but ignore the thousands of dollars leaking out through untracked or unmanaged expenses. Marketing costs, tech subscriptions, brokerage fees, and client perks all add up fast. Without a system, it’s easy to overspend and under-deduct — leaving money on the table at tax time.
The good news? With the right expense management strategy, you can:
Keep more of your commissions
Lower your taxable income
Gain a clear picture of your business health
Avoid surprises when tax season comes around
This guide will show you how to take control of your real estate business expenses step by step.
1. Why Expense Management Matters
Taxes
Every deductible expense reduces taxable income. Missed expenses = higher IRS bill.
Profitability
Expenses should drive ROI (return on investment). If they don’t, they’re eating into your net profit.
Peace of Mind
Knowing where your money goes removes financial stress and helps you plan confidently.
2. Set Up a Clean Expense Tracking System
Separate Accounts
Open a dedicated business bank account and card.
Run all income/expenses through it.
Never mix personal and business.
Use Software
Link accounts so expenses auto-categorize.
Review monthly, not just at year-end.
💡 Pro Tip: Bookkeeping costs less than one missed deduction.
3. Know Your Biggest Expense Categories
Here are the top categories agents should track and review:
Marketing & Advertising
Yard signs, flyers, open house costs
Paid ads (Facebook, Google, Zillow)
Professional photography, staging, video
Technology & Tools
CRM software
DocuSign, Canva, scheduling apps
Website hosting and SEO
Brokerage & Professional Fees
Brokerage desk fees
MLS and association dues
Licensing renewals
Coaching/mentorship
Travel & Vehicle
Mileage (70¢ per mile in 2025)
Gas, tolls, parking (if using actual method)
Airfare, hotels, client-related travel
Client Care
Closing gifts ($25 deduction limit)
Client appreciation events
Meals with prospects (50% deductible)
💡 Exercise: Print your last 3 months of statements and highlight these categories. You’ll likely find spending you forgot about.
4. Apply the ROI Test
Not all expenses are created equal.
Ask:
Does this expense directly generate leads or closings?
Does it save me time so I can focus on income-producing tasks?
Is there a cheaper or more effective alternative?
💡 Example: $500/month on Zillow leads = 1 closing every 6 months. Commission = $6,000. ROI is positive. Keep it.
5. Avoid Common Expense Mistakes
Mixing business and personal expenses: Messy, risky in an audit.
Overwriting deductions: Trying to deduct clothes, personal meals, or family vacations.
Subscription creep: Paying for software you don’t use.
Ignoring small expenses: They add up to thousands yearly.
💡 Pro Tip: The IRS doesn’t care about the size of an expense — track everything.
6. Create an Expense Budget
Think of your business like a startup. Budget for:
Marketing: 10–15% of GCI (gross commission income).
Technology: 3–5% of GCI.
Professional Development: 1–2% of GCI.
Review quarterly. If expenses are out of line, adjust.
7. Review Expenses Monthly
Reconcile accounts monthly.
Print a P&L (profit and loss statement).
Ask: Did these expenses drive results?
8. Work With a CPA Who Knows Real Estate
Not every CPA understands agent-specific expenses. A specialized accountant will:
Help you maximize deductions
Ensure expenses are categorized properly
Advise on budgeting + tax planning
💡 Pro Tip: Don’t just hand your CPA a shoebox of receipts. Collaborate proactively.
Conclusion
Managing your expenses as a real estate agent isn’t just about bookkeeping — it’s about profitability, tax savings, and peace of mind.
Here’s your action plan:
✅ Separate business accounts
✅ Use bookkeeping software
✅ Track key expense categories
✅ Apply the ROI test
✅ Review monthly and adjust
✅ Partner with a CPA who specializes in agents
👉 Want a smarter system for managing expenses? Schedule a call with The Agent’s Accountant.
