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I open & manage new retail stores for my employer. I got my real estate license to help my employer open more locations. Can I deduct the real estate license expenses?

Forum|Forum|7 years ago
June 5, 2019
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Best answer by TomD8

If you're paid as an employee (you receive a W-2 at the end of the year), and you itemize deductions, you can deduct unreimbursed business expenses that are "ordinary and necessary" on your Schedule A.

An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary.

This type of deduction is subject to the 2% "floor". You can only deduct the expenses that exceed 2% of your AGI.

T

TomD8Answer

Employee

If you're paid as an employee (you receive a W-2 at the end of the year), and you itemize deductions, you can deduct unreimbursed business expenses that are "ordinary and necessary" on your Schedule A.

An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary.

This type of deduction is subject to the 2% "floor". You can only deduct the expenses that exceed 2% of your AGI.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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Anonymous

Yes. You can deduct the expense on Schedule C if you qualify as a real estate professional and on Schedule A if you don't.

See:

https://ttlc.intuit.com/questions/3587619-do-i-qualify-as-a-real-estate-professional

https://turbotax.intuit.com/tax-tips/self-employment-taxes/tax-tips-for-real-estate-agents-and-broke...

"Licenses and Regulatory Fees" as unreimbursed employee expense on Schedule A: https://www.irs.gov/publications/p529#en_US_2016_publink100026944

Hal_Al

Employee

Maybe, but probably not.

The general rule is: Educational expenses to improve your current job skills are deductible. But learning a new job is not. Getting a real estate license, almost always means a qualification for a new job. Just exactly how does having a real estate license help you do your CURRENT job? The courses in real estate may have been helpful, and therefore deductible. But it's unlikely that the license fee is deductible.

Once you have a license and use it on your job, the annual renewal fees will be deductible. But, the cost to obtain the initial license is not.

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AA2017Author

Thank you . My position involves identifying, negotiating, closing new locations for company expansion which requires a real estate license (commercial) in AZ. The purpose was to save the company commission costs that an agent would normally receive and also have an internal person with company experience (employed 19+ years with this same employer).

In my case this requires a real estate License. Why would educational /Pre-licensing class expenses required to obtain the license not be deductible?