IRS Mileage Deduction for Real Estate Agents

The IRS sets a standard mileage rate for business use each year, and as a self-employed real estate agent or independent contractor Realtor, you can deduct that rate for every mile driven for business purposes, including property showings, listing appointments, open houses, client meetings, prospecting drives, and office visits. The rate applies to sole proprietors filing Schedule C and to single-member LLCs treated as sole proprietorships. Most Realtors qualify as independent contractors rather than employees, which makes the full standard mileage deduction available to you on your federal return. Check the IRS website or consult your CPA each January for the current year's rate.

Yes. Travel from your home office or brokerage to any property showing is fully deductible at the current IRS standard mileage rate. This includes buyer showings, pre-listing walkthroughs, listing preview tours, and repeat visits to any property in a transaction. When you're running a multi-stop showing tour in a single day — which is routine for buyer's agents — every leg of the route counts as deductible business mileage. You're not required to return to your brokerage between stops. Everlance automatically tracks each segment of a multi-stop drive, so no mileage is missed even on your busiest showing days.

Yes. Driving through target neighborhoods to canvas for listings, deliver marketing materials, research comparable sales, identify FSBO or expired listing opportunities, or scout development activity are all considered ordinary and necessary business activities under IRS Publication 463, and they qualify for the standard mileage deduction. Log each prospecting drive with a brief note: "drove farm area to deliver Just Sold cards and identify FSBO opportunities." That level of specificity is sufficient for IRS purposes and protects your deduction in the event of an audit.

The average real estate agent drives between 10,000 and 25,000 business miles per year, depending on transaction volume, geographic market size, and business development activity. Applied to the current IRS standard mileage rate, that range represents a substantial deduction — and at a 22% federal tax rate, the resulting tax savings can reach into the thousands annually, plus any applicable state deductions. Agents in large metro markets who handle volume buyer business, run regular open houses, and actively farm neighborhoods tend to accumulate mileage at the higher end. Every mile you fail to track is a deduction you're giving back to the IRS unnecessarily.

Yes — every leg of a multi-stop showing tour is deductible. When you drive from one property directly to another without returning to your brokerage in between, each segment of the route counts as deductible business mileage. The IRS does not require you to reset at a fixed location between stops. A dedicated mileage tracking app captures each segment automatically, ensuring you never miss a mile on a busy showing day even when you're focused entirely on your clients.

Commuting from your home to your brokerage office does not qualify as deductible mileage if your brokerage is your principal place of business — the IRS treats this the same as any employee commute. Personal errands run while traveling between properties also do not qualify for the portion of the drive that is personal in nature. However, if you maintain a qualifying home office under IRS rules — meaning a space used regularly and exclusively for business — then travel from your home directly to a client, property, or any other business location is generally deductible from the moment you leave your driveway. Setting up a legitimate home office is one of the most impactful tax moves an independent contractor Realtor can make.

Yes — and this is non-negotiable. The IRS requires contemporaneous mileage records, meaning each trip must be logged at or near the time it occurs, not reconstructed later. Your log must include the date, starting and ending location, business purpose, and total miles for every trip. Without these records, your entire mileage deduction is at risk of disallowance during an audit, even when the underlying trips were completely legitimate. Real estate agents are particularly vulnerable here because the nature of the job makes it easy to accumulate large mileage deductions that invite scrutiny.

Everlance eliminates this risk by automatically tracking every drive via GPS the moment your car starts moving. Each trip is timestamped and geo-verified, giving you an audit-proof log that fully satisfies IRS contemporaneous documentation standards. At year-end, generate a complete IRS-compliant report in seconds.

Most real estate agents benefit more from the standard mileage rate because it requires far less record-keeping and typically produces a larger deduction than tracking actual vehicle operating costs like gas, insurance, registration, and depreciation. The actual expense method can occasionally yield a higher deduction for agents who drive a newer, high-cost vehicle with significant depreciation, but the administrative complexity is considerably greater.

There is one important rule: you must choose the standard mileage method in the first year you use a vehicle for business. Once you use the actual expense method for a vehicle, you generally cannot switch back to the standard mileage rate for that vehicle in future years. Consult your CPA in year one to choose the method that best fits your vehicle and business situation.