Today TaxMama hears from James in Florida with this question. “I’m a licensed Realtor ® in Florida. If I purchased a home warranty plan for a buyer as a gift at closing, could I deduct the cost from my taxes at years end?”
You’re a smart salesman. But you didn’t purchase the home warranty as a gift. Gift deductions are limited to $25 per person per year.
You purchased the warranty as a sales incentive to close the deal. That made the difference between the buyer buying an older home with potential repair problems, or buying a new home from a different Realtor ®. Isn’t that right?
Consider classifying the cost as marketing or advertising. Many real estate agents I know will spend their own money to effect repairs to make a home more marketable or to close a sale.
And remember, you can find answers to all kinds of questions about business expenses and other tax issues, free. Where? Where else? At TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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