Tax time can be stressful, even for the most organised of us. But if you work as a real estate agent, there are plenty of opportunities to take out the sting with a tax return full of clever deductions.
Before we get started…
To claim a tax deduction for a work-related expense:
- you must have spent the money yourself and not been reimbursed
- it must be directly related to how you earn your income
- you should have proof of the expense, such as a receipt
If an expense is for something that you use both in and outside work, you can only claim a deduction for work-related use. For instance, if you were to claim on a laptop that you use as a real estate agent and at home for leisure, only a portion would be claimable as a tax deduction.
Real estate agents can claim tax deductions for expenses on advertising, including letterbox drops, signs, bunting, and editorials and ads in newspapers. Again, you’re only able to make a claim for a deduction if you’re entitled to earn commission.
If your property management agency has a compulsory uniform that identifies you as an employee of that business, you may be entitled to a tax deduction on the purchase and upkeep of that clothing.
While clothing of a specific colour or brand isn’t eligible, a shirt with a corporate logo that you’re required to wear at work would be. You can’t make a claim if these items are purchased and maintained by your employer.
3. Decorating a property
Flowers and plants are commonly used to spruce up an otherwise unexciting listing, and a deep clean can add real appeal to a property. Real estate agents can claim tax deductions for expenses on property presentation, as long as they’re entitled to earn a commission from the sale of that property.
Whether it’s top-shelf cognac or Quality Street, sending out gifts is an effective way to stay popular. Fortunately, expenses on gifts purchased for work purposes are tax-deductible, as long as you’re a salesperson or property manager and entitled to receive your income from commission or both commission and retainer.
Note that gifts in the form of entertainment, such as tickets to sporting events, can’t be claimed. Gifts also can’t be claimed as a deduction if you earn a fixed income and are not entitled to earn a commission.
5. Marketing equipment
Real estate agents are able to claim tax deductions on the purchase and repair of the work-related portion of marketing equipment such as cameras, drones, and other similar expenses.
If the item was purchased for $300 or less and used solely for work, the whole cost can be claimed as a deduction in the year of its purchase. If the item cost more than $300, you’re instead able to claim depreciation deductions over its life. It’s important to note that if the item was purchased part way through the year, you can only claim a deduction for the portion of the year that you owned it.
6. Magazines and newspapers
For real estate agents, it’s essential to keep your finger on the pulse. Expenses on industry-specific publications and newspapers that have real estate sections are all deductible. As a general rule, if the content of the publication is connected to the duties you carry out, it should be eligible.
There are some exceptions to be aware of. If you’re subscribed to a newspaper that only has a property section in some issues, only those issues are deductible.
7. Phone and internet usage
If you use your own phone and electronic devices for work-related purposes, you should be able to claim a deduction for your costs on your tax return. But you’ll need to keep records and show a detailed pattern of use for claims over $50.
You won’t be able to make a claim if your employer provides you with a phone and pays for your usage, or if they reimburse your costs. You can only claim for work-related usage—so no calls to family and friends—even if they occur during work hours or while you’re travelling for work.
Gaining new qualifications and certifications is one of the most effective pathways to progressing a real estate career. If you’re working towards a formal qualification, you may well be able to deduct a portion of the course fees when you submit your tax return.
Eligible courses should maintain or improve specific skills you require in your current work activities, and result in, or be likely to result in, an increase in your income from your current work activities.
9. Tax agent fees
If calculating expenses sounds like a pain and that you might want some help, then there is some good news. Costs associated with using a registered tax agent or an online service can be claimed as a tax deduction.
10. Travel expenses
If you travel for work and sleep away from home overnight in the course of your duties, perhaps inspecting a remote property, your travel expenses may be claimable. This includes costs such as accommodation, fares, meals, and incidentals such as parking fees and tolls.
11. Vehicle expenses
While you can’t claim for your regular commute on your tax return, there are a number of expenses that you can possibly claim for if you use your own car for work purposes.
- driving to and from alternate workplaces for the same employer on the same day, such as between open homes or inspections
- attending a work-related conference or meeting away from your regular workplace
- driving from your real estate office to a second job.
You can also claim tax deductions on other work-essential equipment such as briefcases, satchels, and handbags, assuming you use them to carry items used in your professional life like laptops, tablets, contracts, or stationery.
As with other deductions, if the item is used outside of work as well, you should keep a log of when it’s used privately and professionally. This will make it much easier to calculate which portion of its purchase price or depreciation is tax deductible.
13. Working from home
Property managers who work from home may be eligible to claim a percentage of the running costs of their home office as a tax deduction.
While not everything is claimable, potential deductions include:
- internet access charges
- work-related phone calls
- home office supplies such as printer paper, ink, and stationery
- equipment and furniture
- electricity used for heating, cooling, and lighting
Items you can’t claim include:
- milk, tea, coffee, and other items your employer may have provided in an office
- costs relating to children and their education
- items that you were provided or reimbursed for by your employer, such as a company laptop
- time spent not working, such as taking the dog for a walk or homeschooling children
When considering your deductions, there are a few things to keep in mind. As with marketing equipment, expenses on your home office are only fully deductible if they cost $300 or less. Over $300, you will have to claim a depreciation deduction instead.
With the increase of remote work during the COVD-19 pandemic, the ATO has introduced a shortcut method for Australians to calculate expenses for their tax returns. If you worked from home during the period between 1 March 2020 to June 30 2020, you can simply claim a deduction of 80 cents for each hour worked from home, with less stringent record-keeping requirements than usual. It’s important to note that if you use this method, you can’t claim other expenses for working from home.
Disclaimer: Please be aware that this blog post has been provided for informational purposes only and is not tax advice. Console is not a financial adviser and you should consider seeking independent financial and taxation advice to check how this information relates to your unique circumstances.