What mileage can a real estate agent deduct?

General information, not tax advice. Talk to your own tax professional about your situation, and treat any deduction figure a software tool shows you — in Patio or anywhere else — as an estimate, not a filing.

Most real estate agents drive a great deal and deduct less of it than they are entitled to. A smaller number deduct more than they should. Both mistakes come from the same place: a fuzzy idea of which trips count, which usually collapses into "driving for work counts."

That is not the rule. The rule is about the difference between commuting and business travel, and once you can see where that line falls, almost every trip you take sorts itself.

The one question everything hangs on: where is your tax home?

Business mileage is travel between places of business. Commuting — the trip between your home and your regular place of work — is personal, and it is not deductible, no matter how far it is or how much you would rather it were.

So the first question is not "was this trip for work." It is where does your work day legally start?

For an agent, there are generally two answers, and they lead to very different results.

If your regular place of business is the brokerage office, then the drive from home to the office in the morning is commuting. Once you are at the office, driving to a showing, a listing appointment, an inspection or a closing is business travel. The drive home at the end of the day is commuting again.

If your home office qualifies as your principal place of business, the picture changes substantially. Your work day starts at your desk. The drive from home to a showing is then travel between two business locations, and it counts from the driveway.

This is the single highest-value thing an agent can get right about mileage, and it is why so many agents under-deduct: they assume the first case applies when the second one may. It is also why some over-deduct: they claim the second while the facts describe the first.

Whether a home office qualifies is a real test with real requirements — it turns on regular and exclusive use and on it being your principal place of business. It is worth a conversation with your tax professional rather than an assumption, because it changes the treatment of a large number of trips, every single day, for the whole year.

Trips that are business travel in most agent situations

Once your tax home is settled, these are the ordinary business trips:

• Driving to a showing, a listing presentation, or a buyer consultation.
• Driving to a property you are previewing for a client, or touring on a caravan.
• Driving to an inspection, an appraisal, a survey or a walkthrough.
• Driving to a closing.
• Driving to a client meeting, wherever it happens.
• Driving to put up or take down signage, stage, or check on a vacant listing.
• Driving to a required brokerage meeting, training, or continuing education.
• Driving to a real estate association or MLS office on business.
• The drive between two business stops, always. A showing to a closing is business travel in every scenario.

Trips that are usually not

• Home to your regular office, and back. Commuting, in the first case above.
• Personal errands, even sandwiched between two business stops. If you stop at the grocery store on the way from a showing to your office, that segment is personal.
• The personal portion of a mixed trip. A drive that is mostly a family visit does not become business because you previewed a house near the destination.
• Driving to look for business in general, as opposed to going to a specific appointment, gets fact-specific quickly. This is a good one to ask about rather than assume.

The two methods, and the choice you make once

There are two ways to turn business miles into a deduction.

The standard mileage rate multiplies your business miles by a per-mile rate the IRS sets. It covers fuel, maintenance, insurance and depreciation in one number. You track miles, not receipts.

Actual expenses means tracking what the vehicle really costs — fuel, repairs, insurance, registration, depreciation or lease payments — and deducting the business-use percentage of the total.

The rate for the standard method changes, usually annually, and sometimes mid-year. Do not take a rate from a blog post, including this one. Get the current figure from the IRS's own page on standard mileage rates when you file.

Two practical notes. First, you still have to track your miles under the actual-expense method, because the business-use percentage is miles-based. There is no version of this where not tracking is fine. Second, the choice between methods in the first year you use a vehicle for business constrains what you can do in later years. That is a genuine one-time decision and a good reason to ask before you pick.

What a record actually has to contain

This is where most agents are genuinely exposed, and it has nothing to do with which trips qualify.

A mileage record needs, per trip: the date, the miles, the destination, and the business purpose. A total at the end of the year is not a record. A calendar full of appointments is not a record either, though it is excellent supporting evidence.

You also need your odometer reading at the start and end of the year, and your total miles for the year, so the business-use percentage can be established.

The standard everyone aims for is contemporaneous — written down at or near the time of the trip. Reconstructing a year of driving from memory in April is legal, unpleasant, and much weaker if anyone ever asks.

The practical consequence: whatever you use, the record has to be created while you are still in the car or shortly after. This is the entire reason automatic trackers exist, and it is a much better argument for them than any feature list.

The habit that decides the outcome

Everything above is knowable in an afternoon. The deduction is decided by something much more boring: whether trips get recorded.

An agent who understands the rules perfectly and logs nothing deducts less than an agent with a rough understanding and a tracker that runs by itself. The difference between those two is usually large, and it accumulates every year.

So if you take one thing from this: settle the tax-home question with your accountant, because it changes everything downstream. Then pick the lowest-friction way you will actually capture trips, and start this week rather than in January. The miles you did not record are gone, and unlike almost everything else in this business, they cannot be recovered later.