A 2017 analysis of Australian Taxation Office (ATO) data revealed that real estate agents claim an annual average of $8,634 in real estate tax deductions. This is nearly triple the national average of $3,413.
The nature of a real estate agent’s work means they have a lot of legitimate work-related expenses that their agency doesn’t always offset or reimburse.
With the end of financial year approaching, we outline the top deductions real estate employees can claim at tax time.
Please Note: To claim an expense, you must have spent the money yourself and weren’t reimbursed by your employer. The expense must be directly related to your income and you must have a record (like a receipt) to prove it.
You can claim a deduction for the cost of renewing a real estate certificate of registration held by you as an employee of your agency. However, you can’t claim a deduction for the cost of obtaining the initial certificate of registration.
You can claim a deduction for car expenses when you drive to and from an alternate workplace for the same employer on the same day – for example, travelling to and from residential open homes or client appointments.
You generally cannot claim the cost of trips between home and work.
If you want to claim car expenses, you need to keep a logbook to determine the work-related percentage, or be able to demonstrate to the ATO a reasonable calculation if you use the cents per kilometre method to claim.
You can claim a deduction for the cost of buying, hiring, mending or cleaning certain uniforms that are unique and distinctive to your job. For example, clothing items you are required to wear. The clothing you wish to claim must have a logo that is unique and distinctive to your employer.
You cannot claim a deduction for the cost of buying or cleaning generic clothing worn at work, even if your employer requires you to wear it. For example, black pants and a white shirt.
You cannot claim a deduction for hairdressing, cosmetics, hair and skin care products, even if your employer requires you to be well-groomed.
You can claim a percentage of the running costs of your home office if you work from home. Expenses you can claim include depreciation of office equipment, work-related phone calls and internet access charges, and electricity for heating, cooling and lighting costs.
You generally cannot claim the cost of rates, mortgage interest, rent and insurance.
You can claim the work-related portion of your phone and internet costs if your employer requires you to use your own phone or electronic device. You need to keep records to show your work use if you claim more than $50 on phone and internet expenses.
You cannot claim a deduction if your employer provides you with a phone for work and pays for the usage, or if your employer reimburses you for the costs.
You cannot claim a deduction for any phone calls to family and friends, even while you’re travelling for work. This is because they’re not work-related calls.
You can claim a deduction for the cost of gifts including alcohol and flowers if these are bought for work purposes, but only if you are a salesperson or property manager entitled to receive your income from commission, or you receive both a commission and retainer.
You cannot claim a deduction if you earn a fixed income and you are not entitled to earn a commission.
You cannot claim a deduction for gifts that are in the form of entertainment – eg a live sporting event.
You can claim a deduction for the cost of decorating items used at properties, such as flowers.
You can claim the costs of subscriptions to real estate publications like Elite Agent, Your Investment Property, AFR Weekend or newspapers that have property sections as long as the content of the subscriptions must be connected to the duties carried out by you as a real estate agent. However, if the property section of the newspaper doesn’t appear every day, you can only claim a tax deduction for the days it does appear, rather than for the entire subscription.
You can claim a deduction for the cost of advertising – for example through newspapers, letterbox drops, signage and bunting.
You can’t claim a deduction for the cost of advertising if you earn your income from a fixed salary and you are not entitled to earn commission.
Tax Agent Fees
You can claim on the fees that you paid last financial year to prepare your tax return. In addition to this, if you met with a recognised tax advisor, you can claim on the fees charged and the associated travel expenses.
You can claim a deduction for self-education expenses if they are directly related to your current employment as a real estate employee and it:
You can’t claim a deduction if the education is only related in a general way and designed to:
Self-education expenses include fees, travel expenses (for example, attending a conference interstate), transport costs, books and equipment. You usually have to reduce your self-education expenses by $250 – that is, the first $250 of expenses for self-education aren’t deductible.
You can also claim for the cost of seminars and conferences that relate to your work as a real estate employee.
So, which Validum Real Estate course are you going to study before the new financial year?
Tip: You can use the ATO app myDeductions tool to keep track of your expenses and receipts throughout the financial year.
The information in this article is obtained from ATO website and applies to real estate agents employed by a real estate agency.
Important Note: The information in this article is provided for general information only. If you require further information on any deductible items or to determine if you are entitled to claim an expense, please speak to your accountant.