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TaxTip about Giving Gifts to Your Clients

Posted at Property Management Software by Niman Singh

Apr. 24, 2008

Categorized in: Property Management Software

Tagged with: real estate professionals, taxtips

Starred by: 1 Member

If you give gifts in the course of your business, you can deduct all or part of the cost, but you cannot deduct more than $25 for each business gift that you gave away during the tax year. A gift that is intended for the eventual personal use of a person or class of people is considered a gift. Incidental costs, like gift wrapping, packaging, insuring, and mailing, are generally not included in determining the cost of the gift.
If a gift item costs less than $4, has your name clearly and permanently imprinted on it, and is one of many identical items that you widely distribute (like pens and cases) - it is not considered a business gift and is not subject to the $25 limit.
	Signs, display racks, and other promotional materials are also an exception to the $25 limit. If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. This rule does not apply if you have an independent relationship with that family member.
There is an annual gift exclusion which you can use, but it is beyond the scope of this post. I'm just trying to cover what is normal in the real estate business. I hope these tips will help you with knowing what you can and can't deduct as a gift expense. To learn more about other expenses that you can deduct, take a look at these tips.