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Tax Claim Tips For Real Estate Agents

As a real estate agent, you can pay significant amounts of income tax, particularly if you work on commission or with luxury clients. However, there are plenty of ways for you to reduce your tax burden and limit the amount of tax you pay.

The key is to understand what expenses you can deduct from your tax bill. It’s important to report your earnings properly so you don’t fall into hot water with the Australian Taxation Office (ATO), which means knowing where you can deduct from your bill and how to report your earnings. 

Let’s find out what real estate agents can do to have a smooth end of financial year (EOFY).

What taxes do real estate agents need to pay?

As a real estate agent, like other Australian workers, you must report your salary or wage as income on your tax returns. You also have to include any bonuses you got, such as commission on sales or end-of-year bonuses.

Allowances are also considered part of your income. If you receive an allowance from your employer for any reason, you may not always be able to claim it as a deduction. 

Examples of allowances that you may not be able to claim include:

  • Compensation for an aspect of work that’s dangerous or unpleasant, such as a health and safety representative.
  • Compensation for industry peculiarities, such as working in extreme weather.

On the other hand, there are allowances you may be able to claim, such as:

  • An amount given for special skills, such as obtaining a first-aid certificate.
  • An amount given towards certain expenses, such as a mobile phone allowance.

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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.

Track your expenses with QuickBooks

When filing your taxes, it’s important to know what real estate agent tax deductions you are eligible for. The last thing you want is to spend hours hunting for lost receipts and calculating totals. 

QuickBooks accounting software can help you stay on top of things to get you through tax season in no time. Track payments on the go in the mobile app, auto-track your travel expenses and see exactly how much tax you owe, helping you to plan for the future. Sign up today for a 30-day free trial.

While every care has been taken to ensure the accuracy of the information presented as at 01 May 2023, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.


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