Standard Mileage Rate vs. Actual Expenses
When writing off vehicle expenses on Schedule C, real estate agents have two primary options:
Standard Mileage Method
You track all business mileage driven and multiply it by the yearly IRS rate (67 cents/mile in 2024). This is the easiest, most popular option and covers all fuel, oil, tires, maintenance, insurance, and vehicle depreciation.
Actual Expense Method
You keep detailed receipts of every vehicle-related expense (gas, repairs, lease payments, insurance) and write off the exact business-use percentage of those costs. This requires heavy record-keeping but can be beneficial for expensive, heavy vehicles.
What Driving is Deductible for Real Estate Agents?
To qualify as a business mileage write-off, the driving must have a clear business purpose. Everyday commuting to a fixed office is generally not deductible, but the following real estate driving scenarios are:
- Property Showings & Client Tours: Driving buyers around to inspect homes or traveling to listings to conduct tours is 100% business-related.
- Listing Presentations & Appraisals: Trips to prospective client homes, open houses, inspections, walk-throughs, and appraisals are deductible.
- Lockbox & Signage Logistics: Traveling to listings to place signs, set up keyboxes, lockboxes, or deliver flyers counts as business driving.
- Supplies & Banking Errands: Driving to office supply stores for paper, signs, printers, or to banks to escrow earnest money checks are business errands.
IRS Record Keeping & Audit-Proofing
The IRS heavily audits vehicle deductions. If audited, the IRS will reject estimates or spreadsheet approximations written retrospectively. You must hold a contemporaneous log featuring:
- The exact date of each trip.
- The total miles driven for that specific trip.
- The starting and ending address or destination.
- The business relationship (e.g. "Listing presentation at 123 Main St").
IRS Mileage FAQ
Can I write off my daily commute to the brokerage office?▼
No. Under IRS rules, commuting from your home to your primary brokerage office is a personal expense and is not tax-deductible. However, if your home office is qualified as your principal place of business, all trips from your home to listings or meetings become deductible.
What is the standard mileage rate for 2024 and 2025?▼
For 2024, the IRS business mileage rate is 67 cents per mile. The IRS updates this rate annually in late December for the subsequent calendar year based on nationwide vehicle cost indexes.