Many real estate agents can shave thousands of dollars off their tax bill by deducting their business driving expenses.
The most popular way to calculate this deduction is to multiply the number of business miles driven by the standard mileage rate set by the IRS, which is 57.5 cents in 2015.
Because many agents don’t keep exact records of the number of their business miles, lots of agents underestimate them, resulting in lost savings.
Part of the idea behind the mobile app Deductr is to help people avoid leaving money on the table when claiming deductions for business driving expenses.
Users can track every mile they drive by tapping their smartphone when they begin driving and tapping again when they finish. The app uses GPS to log the distance traveled during trips.
In the future, Deductr will automatically track miles for users, eliminating the need to manually initiate and end tracking. Users will be able to review their log of miles periodically and weed out nonbusiness trips.
MileIQ, another app that lets users track their gas mileage, already offers such functionality, which it calls “Smart Drive Detection.”
But Deductr can also help real estate agents keep tabs on other business expenses, such as meals with clients, closing gifts, mobile phone bills and office fees.
The app lets users capture images of receipts, and integrates with credit or debit card accounts so that users can import records of purchases rather than manually input them.
The second feature is particularly helpful for deductions claimed on expenses of $75 or less, since a person isn’t required to keep receipts to substantiate such expenses.
Deductr can also host multiple user accounts, meaning a team of agents part of a business could log all their miles into a single account.
When tax season rolls around, users can generate a comprehensive report of expenses and hand it over to an accountant.
“Whereas [accountants] used to hate you because you were the guy who walked in with a shoebox, now you’re organized [and] he does a better job for you,” said Deductr CEO John Thomas.
Thomas said Deductr has been around for six years, but began targeting real estate agents last year after being accepted into REach, a tech accelerator program run by Second Century Ventures, the venture capital fund of the National Association of Realtors.
The accelerator helped REach forge connections that have evolved into partnerships with real estate companies including Re/Max, which offers the app to its agents at a 50 percent discount, Thomas said.
The app’s retail price is $20.