Is Real Estate School Tax Deductible?
The short answer: Usually not as a business deduction, at least not the course you take to get your first license. Federal rules don't let you deduct education that meets the minimum requirements of your trade or qualifies you for a new one (IRS Tax Topic 513). Continuing education after you're licensed is a different story. A separate tax credit, the Lifetime Learning Credit, may help with either, but only if the school is an eligible institution and your income is under the limit (IRS Publication 970).
This page explains the federal rules in plain language. It isn't tax advice, and your own facts matter, so confirm with a tax professional before you file.
What makes education deductible as a business expense?
The IRS gives two tests. Education can be deductible if it "(1) maintains or improves skills needed in your present work or (2) your employer or the law requires to keep your present salary, status or job" (Tax Topic 513).
Then come two exclusions. Even if one of those tests is met, the education "can't be part of a program that will qualify you for a new trade or business or that you need to meet the minimal educational requirements of your present trade or business" (same source). The underlying regulation adds that "the fact that an individual is already performing service... does not establish" that the person has met the minimum requirements (Treas. Reg. § 1.162-5).
Can I deduct the 75-hour pre-licensing course?
Generally no, as a business expense. New Jersey requires 75 hours of approved pre-licensing education before you can be licensed as a salesperson (N.J.S.A. 45:15-10.1). That course is the minimum education for the job, and it qualifies you for a new line of work. Both are among the exclusions above.
The regulation's own examples point the same way. A law clerk's night law school and bar review course weren't deductible, because they were the minimum education required to qualify for the work (Treas. Reg. § 1.162-5).
Note that this is about the deduction. The tax credit discussed below follows different rules. For what the course covers, see our guide to the NJ 75-hour course. For the full list of startup costs, see how much a NJ real estate license costs.
What about continuing education once I'm licensed?
Continuing education usually fits the first test. It keeps your license active, which the law requires, and it maintains your skills in work you already do. Our NJ CE requirements guide covers what's required each license term.
If you're self-employed, Topic 513 says you report education expenses on Schedule C (IRS Tax Topic 513). Publication 970 notes that a business deduction for work-related education also reduces self-employment tax (IRS Publication 970). Most NJ agents are paid as independent contractors. See our guide to taxes for 1099 agents for how Schedule C and self-employment tax work.
Is the broker course deductible?
It's not as clear-cut. The broker pre-licensing course is 150 hours (N.J.S.A. 45:15-10.1). Whether that education counts as improving skills in your present work or qualifying you for a new trade or business depends on the facts, and the IRS rules don't single out real estate. Ask a tax professional before you claim it. For the steps to the broker license, see how to become a broker in NJ.
Can the Lifetime Learning Credit help with real estate school?
Possibly. A credit reduces your tax directly, rather than reducing your income. Here's how Publication 970 describes the Lifetime Learning Credit for 2025 tax returns (IRS Publication 970):
| Rule | What Pub 970 says |
|---|---|
| Amount | 20% of the first $10,000 of qualified expenses; up to $2,000 per return |
| Refundable? | No. It can lower your tax to zero but won't create a refund by itself |
| Which courses | Part of a degree program, or "taken by the student to acquire or improve job skills" |
| Degree needed? | No |
| Where | An "eligible educational institution," meaning one eligible for U.S. Department of Education student aid programs |
| Income limit | Phases out between $80,000 and $90,000 of modified AGI ($160,000-$180,000 if filing jointly) |
The key question is whether your school is an eligible institution. Pub 970 says "the educational institution should be able to tell you." Ask before you count on the credit. Pub 970 also covers Form 1098-T: a credit generally requires one, with exceptions, including courses for which no academic credit is awarded. In those cases you must still show you were enrolled at an eligible institution and paid the expenses.
You can't use the same expense for both a deduction and a credit. The IRS's education credit eligibility tool walks you through the questions.
What should I keep for my records?
- Tuition receipts and proof of payment
- Course descriptions showing the hours and subject
- Any Form 1098-T the school sends
- For CE: records of completed courses, plus mileage if you drive to class (Pub 970 lists the 2025 business-education mileage rate as 70 cents a mile)
Ready to start the license itself? Business Elementary's 75-hour pre-licensing course is the first step.
Sources
- IRS Tax Topic 513, Work-related education expenses (updated Sept 24, 2026): https://www.irs.gov/taxtopics/tc513
- Treas. Reg. § 1.162-5, Expenses for education (eCFR): https://www.ecfr.gov/current/title-26/section-1.162-5
- IRS Publication 970, Tax Benefits for Education (for 2025 returns): https://www.irs.gov/publications/p970
- IRS Interactive Tax Assistant, Am I eligible to claim an education credit?: https://www.irs.gov/help/ita/am-i-eligible-to-claim-an-education-credit
- N.J.S.A. 45:15-10.1, education requirements (Justia): https://law.justia.com/codes/new-jersey/title-45/section-45-15-10-1/
Last reviewed: November 2, 2026
Frequently Asked Questions
Can I deduct real estate school if I'm changing careers?
Generally not as a business deduction. Education that qualifies you for a new trade or business is excluded, even if you're already working in another field (IRS Tax Topic 513). The Lifetime Learning Credit is a separate question.
Does the American Opportunity Credit apply to real estate school?
That credit requires a student pursuing a degree or other recognized credential, enrolled at least half-time, in the first four years of postsecondary education (IRS Publication 970). A short licensing course usually doesn't fit, so check with a tax professional.
Are New Jersey state income tax rules the same?
Don't assume so. This page covers federal rules only. New Jersey's gross income tax has its own rules, so ask a preparer about your state return.
What if I took the course but didn't get licensed?
The business deduction rules start with having a present trade or business. Someone who never became an agent wouldn't have that. The credit rules don't depend on getting licensed. Talk to a tax professional about your situation.