How much to spend on a closing gift
There’s no rule, and no good survey. The amounts usually quoted, 1% to 5% of your commission or about $50 to $300, are industry convention. This calculator sets a budget from what you keep on the deal and shows what it adds up to over a year.
The $25 tax limit
The IRS lets you deduct business gifts only up to $25 per recipient per year (Publication 463). One gift to a couple is generally treated as one gift. Engraving, wrapping and shipping don’t count toward the $25 when they add no real value. On a $150 gift, $25 is deductible and $125 is not. Ask your tax adviser how this applies to you.
Rules besides tax
- A gift to your own client after closing is generally fine under federal law.
- A gift promised up front to win the client can be an inducement or rebate, which some states restrict. Check your state and your broker’s policy.
- A gift to someone who sends you mortgage, title or other settlement business is a RESPA matter. See co-marketing with lenders.
- Never tie a gift to a review. Google bars incentives of any kind for reviews.
Useful beats expensive. More ideas are in closing gifts: what to spend and what you can deduct.
Questions agents ask
How much do real estate agents spend on closing gifts?
Commonly quoted ranges are 1% to 5% of the agent’s commission, or about $50 to $300. Those are industry conventions, not survey results.
Are closing gifts tax deductible?
Only up to $25 per recipient per year under IRS rules, and one gift to a couple is generally treated as one gift. Ask your tax adviser.
Can I give a client a gift card as a closing gift?
Generally yes after closing, though only $25 is deductible. If it is promised in advance to win the business, check your state’s rules on inducements and rebates.