Can I deduct car loan interest alongside standard mileage deduction as a self-employed realtor?
I'm a newly licensed realtor (just started this year) and I'm trying to figure out my vehicle expense options for tax purposes. About 70% of my driving is for showing properties, meeting clients, and other business activities. I'm in the market for a new car and trying to decide whether to finance or just pay cash for something cheaper. My question is: if I use the standard mileage deduction method (which seems simpler for tracking), can I ALSO deduct the interest I pay on my car loan as a separate business expense? I'm getting conflicting advice when I research this. Some tax sites say yes, the loan interest is deductible in addition to the standard mileage rate (for the business percentage). Other sources say no, that the standard mileage rate already includes all vehicle costs including depreciation and interest. I need to make a decision soon on the vehicle purchase, and understanding the tax implications would really help me determine how much I should spend and whether financing makes sense. Any insight would be greatly appreciated!
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StarGazer101
As a tax preparer who's worked with many realtors, I can clarify this for you. When you use the standard mileage deduction, the IRS considers that to include ALL operating costs - gas, maintenance, depreciation, insurance, and yes, loan interest. The standard mileage rate (68.3 cents per mile for 2025) is designed to be comprehensive. If you choose this method, you cannot also separately deduct car loan interest. However, there are some car-related expenses you CAN still deduct separately even when using standard mileage: parking fees and tolls related to business travel, property taxes paid on the vehicle (usually through registration fees), and interest on a car loan - BUT only if you're self-employed AND only for the business percentage of use (your 70%). This is why you're seeing conflicting information. Employees cannot deduct the interest portion at all, but self-employed individuals like yourself can deduct the business portion of interest in addition to taking the standard mileage rate.
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Keisha Jackson
•Wait, I'm confused. You said "When you use the standard mileage deduction...you cannot also separately deduct car loan interest" but then later you said "you CAN still deduct...interest on a car loan" if you're self-employed. Which is it? Can a self-employed person deduct both or not?
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StarGazer101
•Sorry for the confusion! Let me clarify: Self-employed individuals CAN deduct both the standard mileage rate AND the business portion of their car loan interest. This is a special exception that applies only to self-employed taxpayers. So in your case as a realtor using your vehicle 70% for business, you can take the standard mileage deduction for your business miles AND separately deduct 70% of the interest paid on your car loan. Keep good records of both your mileage and your loan interest payments to support these deductions.
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Paolo Romano
After spending hours trying to figure out my realtor vehicle deductions last year, I finally discovered taxr.ai (https://taxr.ai) and it was a game-changer! I was in exactly your situation - new realtor, confused about vehicle deductions, and getting contradictory advice. I uploaded my car loan statement, mileage log, and some pics of receipts, and the system analyzed everything and showed me exactly what I could deduct. It confirmed I could take both the standard mileage rate AND deduct my car loan interest (for the business portion only). They even showed me the specific IRS publication sections that explained it. The best part was when I had my tax appointment, I just shared the analysis with my accountant and we breezed through that section. Saved me so much stress and probably got me better deductions too.
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Amina Diop
•Does it actually explain the tax laws in understandable terms? I'm asking because my previous accountant would just say "trust me" without explaining anything, which made me nervous.
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Oliver Schmidt
•This sounds useful but I'm worried about privacy. Do you have to upload all your personal financial documents to some random website?
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Paolo Romano
•It absolutely explains everything in simple terms! Each deduction gets a clear explanation with the exact IRS rules that apply to your situation. I actually learned a lot about business deductions I wasn't taking advantage of. Regarding privacy concerns, they use bank-level encryption and you can blur out account numbers or other sensitive info before uploading. I was hesitant at first too, but their privacy policy convinced me they're legitimate. They're only analyzing the tax-relevant information, not storing your financial details for other purposes.
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Amina Diop
Just wanted to follow up about my experience with taxr.ai after seeing it recommended here. I decided to try it since I've been struggling with the same vehicle deduction question as a new real estate agent. It was actually really straightforward. I uploaded my car loan statement and mileage logs, and within minutes got a detailed breakdown explaining exactly what I could deduct. For me, that meant both the standard mileage rate AND 65% of my loan interest (my business use percentage). The explanation referenced IRS Publication 535 and explained that while the standard mileage rate includes general interest costs, self-employed individuals can still deduct business interest as a separate expense. Honestly, it cleared up so much confusion and I feel way more confident about my deductions now!
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Natasha Volkov
If you're getting frustrated with trying to reach the IRS to confirm these deduction rules, try using Claimyr (https://claimyr.com). I spent literally days trying to get through to the IRS about this exact vehicle deduction question last tax season. After using Claimyr, I was connected with an actual IRS agent in about 15 minutes who confirmed that as a self-employed person, you CAN deduct both the standard mileage rate AND the business percentage of your car loan interest. The agent even emailed me the relevant section of the tax code. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Basically it navigates the horrible IRS phone system for you and calls you back when it reaches an agent. Totally worth it when you need a definitive answer straight from the IRS.
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Javier Torres
•How does this actually work? They somehow get you to the front of the IRS phone queue? That seems impossible given how backed up the IRS phone lines are.
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Emma Wilson
•Sorry but this sounds like BS. Nobody can magically get through to the IRS faster. I've tried calling dozens of times and it's always "due to high call volume" then hangup. If this worked, everyone would use it.
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Natasha Volkov
•It doesn't put you at the "front of the line" - it basically automates the calling process. Their system repeatedly calls the IRS, navigates through all the phone menus and holds until it gets through to an agent. Once it reaches a real person, it calls you to connect. It's just saving you from having to do that repetitive calling yourself. The reason it works is because most people give up after a few attempts, but their automated system just keeps trying until it gets through. The IRS still has the same wait times, but their system is persistent enough to eventually connect. For me it took about 15 minutes, but I've heard it can sometimes take longer depending on call volume.
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Emma Wilson
Well I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to get an answer about vehicle deductions for my tax filing. I was shocked when I got a call back in about 25 minutes with an actual IRS representative on the line. I asked specifically about deducting car loan interest along with the standard mileage rate as a self-employed person. The agent confirmed that yes, self-employed individuals can deduct the business portion of car loan interest in addition to taking the standard mileage rate. They referred me to IRS Publication 535 (Business Expenses) which specifically addresses this. I've been doing my taxes wrong for the past two years! Now I'm considering whether I should file amended returns to claim those missed deductions.
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QuantumLeap
One thing nobody's mentioned yet is that if you take out a home equity loan to buy the car instead of a car loan, the interest might not be deductible at all anymore. The tax law changes from a few years back limited home equity interest deductions to home improvements only, I think. Also, make sure you track your mileage PERFECTLY with a good app or logbook. The IRS loves to challenge mileage deductions for realtors if you get audited!
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Yara Nassar
•Thanks for bringing that up about the home equity loan! I was actually considering that option since the interest rate would be lower than an auto loan. So you're saying if I use a home equity loan to buy the car, I couldn't deduct the interest even for the business portion? Also, any recommendations for a good mileage tracking app? I've been just writing down odometer readings in a notebook but I know there must be better options.
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QuantumLeap
•That's right - if you use a home equity loan to buy the car, the interest isn't deductible as a business expense because the loan is secured by your home, not the vehicle. The 2018 tax law changes limited home equity interest deductions to only home improvements, regardless of how you use the money. For mileage tracking, I highly recommend MileIQ or Everlance. Both automatically detect drives and let you swipe to categorize them as business or personal. They create IRS-compliant reports with all the information you need. The automatic tracking is a lifesaver because you'll never forget to log a trip. They cost about $5-6/month but are well worth it and the subscription itself is tax-deductible!
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Malik Johnson
Honestly just use the actual expenses method your first year instead of standard mileage. You can switch to standard mileage in later years if it makes sense, but you can't go from actual expenses to standard mileage later. With actual expenses, everything is clearly deductible for the business % - gas, maintenance, insurance, interest, depreciation, registration, etc. No confusion about what's included.
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Isabella Santos
•That's not totally accurate advice. If you use actual expenses the first year, you can NEVER use standard mileage for that vehicle in future years. But if you use standard mileage the first year, you can switch back and forth between methods in subsequent years.
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Abigail Spencer
As a CPA who specializes in real estate professionals, I want to clarify the correct answer to your original question: YES, as a self-employed realtor, you CAN deduct both the standard mileage rate AND the business portion of your car loan interest. This is specifically allowed under IRC Section 162 for self-employed individuals. The standard mileage rate covers operating expenses, but loan interest is considered a separate financing cost. So with your 70% business use, you'd deduct 70% of your annual loan interest payments as a business expense on Schedule C, in addition to your mileage deduction. Just make sure to keep excellent records - your loan statements showing interest paid, and detailed mileage logs. The IRS scrutinizes vehicle deductions heavily for realtors, so documentation is key. One strategic tip: if you're financing, consider timing your purchase so you have a full year of interest payments to deduct. Also, since you're new to real estate, your first year income might be lower, so maximizing deductions now could be especially valuable.
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Giovanni Martello
•Thank you for the clear explanation! This is exactly the kind of professional insight I was hoping to find. I really appreciate you citing the specific IRC Section 162 - that gives me confidence I'm getting accurate information. Your point about timing the purchase for a full year of interest payments is really smart. I hadn't thought about that angle. Since I'm just getting started and expect my income to ramp up over the next couple years, maximizing deductions now definitely makes sense. One follow-up question if you don't mind - when you say "detailed mileage logs," what level of detail does the IRS typically expect? Is it sufficient to track start/end locations and business purpose, or do they want more granular information?
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Zainab Ibrahim
•For IRS compliance, your mileage log should include: date, starting location, ending location, business purpose, and total miles for each trip. Many realtors also include the client name or property address for extra documentation. The key is contemporaneous records - meaning you track it when it happens, not reconstruct it later. Apps like MileIQ mentioned earlier are great because they timestamp everything automatically and let you add business purposes right when the trip ends. One tip: if you're showing multiple properties in one day, you can log it as one business trip from your first stop to your last, rather than breaking it into individual property visits. Just make sure your business purpose clearly describes the day's activities. Also keep your first and last odometer readings of the tax year - the IRS sometimes asks for total annual mileage to verify your business percentage calculation makes sense.
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