Tax deductions for real estate agents
As a real estate agent, you are entitled to a variety of deductible expenses. Most of them are common tax-deductible expenses across a variety of industries, while others are more specific to realtors. Here’s what you need to know.
Car and travel expenses
The ATO allows you to claim the cost of travelling between different work sites. Generally, you cannot claim for the journey between your house and your workplace, including a real estate office, or for the journey home at the end of the day.
However, if you are travelling between open homes on the same day, then these journeys may be considered tax-deductible expenses. Make sure you keep a logbook of kilometres travelled (or use the cents per kilometre method) to ensure you are deducting the right amount.
In limited circumstances, you may be able to claim a trip between your home and your workplace. For example, if you are carrying bulky tools or equipment that are essential for your work, you may be able to claim the cost of travel.
To claim the cost of trips where you are carrying bulky tools or equipment, you need to meet all of the following conditions: the tools are essential for your work duties, the tools are bulky and difficult to transport, and there is no secure place to store them at your workplace.
Other work-related travel expenses are also tax-deductible. If you are showing a property in a remote area or staying overnight at a conference, you may able to account for the following expenses:
- Travel fares
- Tolls
- Parking fees
- Accommodation
- Meals
Clothing expenses
You can claim a deduction on uniforms distinct to your employer, meaning it must display a company logo. These expenses include buying or renting, mending, and cleaning the uniform.
Notably, the ATO is quite strict about clothing expenses. Even if your employer requires you to wear a particular style of outfit, like a suit, these purchases do not count as a tax-deductible expense. That is because those clothes could be considered conventional clothing and can be worn by people regardless of profession.
Working from home expenses
For realtors that work from home, you can also deduct home office expenses. This includes equipment, supplies, and depreciation on any equipment valued over $300, such as a laptop or desk.
Expenses on your utilities, such as gas, internet, electricity, and phone bills can also be claimed. However, you need to do calculations to determine how much of your usage can be attributed to work because you can only claim the portion that is used for work purposes.
Client gifts
If you work as a salesperson or a property manager and receive income based on commission or a combination of commission and a retainer, you may buy gifts for your clients, including flowers, wine, or chocolates. These gifts are deductible so long as all or part of your income is commission-based.
Please note, however, that entertainment-related gifts do not count. So, if you take a client out for a meal or to a sports event or even provide holiday vouchers, you cannot deduct these expenses – even if you discuss real estate while you are with them.
If you have a fixed salary and are not entitled to a commission, then you will not be able to claim a deduction for the cost of gifts.
Certification or licencing fees
Like other industries, as a real estate agent, you can claim back the cost of renewing your industry certification or your real estate licence. It is important to note that you can only claim the cost of renewal, not the cost of getting the certification or licence.
Self-education expenses
You can claim a deduction on expenses incurred through self-education. In other words, if you are taking a course on real estate that will improve your skills, the course fees and materials are deductible from your total tax bill.
The ATO is quite strict, though, and you cannot deduct expenses for courses that you take to help you change employment. You also cannot deduct expenses if the course has no connection with your current employment or if it only relates in a general way.
Marketing equipment and advertising costs
Advertising and marketing costs are also deductible, including expenses on flyers, newspapers and social media adverts.
Marketing equipment, like cameras or drones, can also be deducted, but you can only subtract the portion you use for work. So, if you also use the camera for personal reasons, the entire amount cannot be deducted.
It is important to note that you can only claim the cost of advertising as a deduction if you earn a commission and not if you have a fixed income.
Property expenses
Finally, it’s important to consider that property expenses are deductible. This includes presentation costs, such as cleaning the property and buying decorative elements in preparation for an open house.
Also read: Tax tips for hair and beauty salons.
