How the Fall 2025 Market Shift Is Changing Tax Strategies for DMV Realtors
It’s no secret that the DMV real estate market looks different this fall. After two years of rising interest rates and limited inventory, 2025 has brought signs of movement — but not in the ways many realtors expected.
Across DC, Maryland, and Virginia, we’re seeing a mixed bag: cooling prices in suburban areas, bidding wars returning in certain DC neighborhoods, and investors cautiously reentering the market as mortgage rates finally dip below 6%.
For realtors, this shift doesn’t just affect listings and commissions. It changes how your income, deductions, and business planning should look heading into tax season. Here’s how to adapt your tax strategy for the new market reality.
1. Revisit Your Entity Structure Before Year-End
Many realtors start out as sole proprietors, but once your commission income climbs above six figures, it’s worth asking: is your current setup still tax-efficient?
With the IRS reviewing more Schedule C filings, and higher self-employment tax liabilities, it may be time to consider an S Corporation election. In an S-Corp, you can pay yourself a reasonable salary (subject to payroll taxes) and take the remaining profit as a distribution — potentially reducing your overall tax burden.
If your 2025 commissions have been strong despite the slow market, talk to your CPA about switching structures before the year ends.
2. Take Advantage of Market-Related Business Deductions
Slower inventory means more marketing. Realtors across Northern Virginia and Montgomery County are doubling down on lead generation — from Zillow Premier Agent listings to video walkthroughs and local sponsorships.
All those expenses are deductible, but only if tracked properly. Common missed write-offs include:
- Professional photography and virtual tours
- Social media ads and CRM subscriptions
- Broker fees, MLS dues, and referral splits
If you’re ramping up visibility this fall, your marketing costs can significantly offset taxable income for 2025.
3. Deduct Continuing Education and Licensing
The 2025 market has forced many agents to diversify — some are earning certifications in staging, luxury listings, or even short-term rental management.
Courses, renewals, and designations like CRS or GRI are fully deductible as long as they relate to your current business. Keep digital copies of certificates or receipts to avoid IRS pushback.
4. Track Vehicle Mileage in Real Time
Fall is open house season, and the average DMV realtor drives hundreds of miles a month. The IRS 2025 standard mileage rate is expected to stay around 67 cents per mile, which can add up to thousands in deductions.
Apps like MileIQ or QuickBooks Self-Employed make this effortless — and accurate logs are essential if audited. Don’t rely on estimates.
5. Prepare for Uneven Income Flows
With closings spread unevenly this year, some realtors are seeing lumpy income cycles — big payouts one month, quiet weeks the next.
Work with your CPA to estimate quarterly tax payments and avoid penalties. You can also set up a separate “tax savings” account to automatically move a percentage of each commission for future payments.
Final Thoughts
Market shifts come and go, but proactive planning never goes out of style. As the DMV housing landscape evolves, your tax strategy should evolve with it.
At Shahbaz Associates CPAs, we help realtors across DC, Maryland, and Virginia minimize taxes, structure their businesses efficiently, and stay audit-ready all year long.
If you’re planning ahead for 2025 filings, now’s the time to get your books in order — before year-end surprises hit.