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Tax Planning Advice for Real Estate Lawyers

Posted by Ann Irons, CPA

Nov 13, 2014 5:06:00 PM

attorney-tax-planningLike any business owner, a real estate lawyer who practices independently may be eligible for certain deductions when filing a tax return.

Claiming the Home Office Deduction

If you are a solo attorney, startup firm, or part of a virtual office, you most likely spend a good deal of time working from home. By maintaining a home office, you may be eligible to claim some carrying costs as a deduction on your tax return. This will depend on the size of the dedicated workspace to the home itself and must be deducted only if used regularly. In other words, it isn’t enough to have a home office; you must occupy it on a regular basis for work-related purposes only.

Transportation Expenses

Do you use your own vehicle when traveling for work? If so, you have two options: Either you can claim the standard mileage rate (currently 55.5 cents/mile) for business use, or you can claim actual expenses related to the use of your vehicle; examples include fuel, parking, depreciation of value, and related repairs. If you intend to claim the standard mileage rate, be prepared to maintain a mileage log; it’s required by the IRS.

It may be possible for an attorney to write off a significant portion of the purchase price of a new vehicle as accelerated depreciation. The vehicle must be used for business purposes at least half of the time, and the amount must be written off during the same year in which the vehicle is purchased.

Entertainment and Meals

This is a tricky deduction. As a lawyer, you may deduct half of expenses for meals and entertainment only if the expenses are incurred while meeting with an existing client for the purpose of discussing business. When dining with a prospective client, there must be a reasonable expectation that the meeting will result in some future benefit to the business. To ensure compliance, I recommend keeping detailed records of any such meetings and their related expenses. At the very least, you’ll want to record the date, location, client name, and the nature of your discussion.

Retirement and Insurance

The requirements for retirement contributions for self-employed attorneys are similar to those for any taxpayer. If you are over the age of 50, you can contribute a maximum of $6,000 to your IRA. $5,000 is the maximum allowed contribution for taxpayers up to the age of 50.

As an attorney practicing independently, you are allowed to claim medical and dental premiums for yourself, your spouse, and your dependents as deductions, as well as expenses for long-term care. Note, however, that your dependents’ and spouse’s premiums can only be deducted if they are eligible for coverage under your spouse’s employer-sponsored health plan.


guide to escrow accounting for real estate attornies

Topics: Individual Income Taxes

About Ann M. Irons, CPA LLC

ann_irons_head_shotAnn spent over 25 years in the financial service industry, gaining knowledge and experience that allows her to provide an array of tax, bookkeeping, and accounting services for her clients. Relying on a stringent code of ethics and a dedication to maintaining the highest industry standards, Ann works hard to ensure her clients receive the quality service they’ve come to expect. A member of AICPA and MSCPA, Ann has also had an article featured in the renowned publication, Banker and Tradesman. 

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