As a real estate agent, finding your way around the tax system can be difficult. So, in order to take a weight off your shoulders and help you make the most of your heard-earned cash, we’ve compiled a list of top tips that will help you deduct from your tax bill efficiently.
What Can I Deduct as a Real Estate Agent?
As a real estate agent, you can claim tax deductions on the following:
- Referral expenses
- Your real estate license, as well as renewals
- Advertising costs
- Vehicle/transport expenses
- Mobile phone costs
It’s essential that you keep hard-copy evidence of everything you intend to claim on, such as receipts, invoices and bank statements. The same goes for travel costs. Although you’re entitled to claim travel expenses for journeys related to work, you need to have the required paperwork. If you don’t have it, you can’t make the claim.
Unfortunately, you can’t claim fuel expenses for your journey to and from work, as this is deemed to be private travel.
How Can I Claim Deductions for Travel?
There are a couple of core methods you can use to claim your tax deductions for travel.
Cents per Kilometre
This is a set rate for every kilometre you travel for business. With this method, you can claim up to 5,000 business kilometres a year per vehicle. If you think you travel over 5,000 kilometres a year for business, the other method of deduction will be better suited to you.
The amount you claim is calculated by multiplying the number of kilometres you’ve travelled by 66 cents, as this number accounts for all running expenses associated with the average vehicle.
Whilst you don’t need to have written evidence, you will need to be able to show that you’ve made the journeys you’ve claimed you have. For this, a logbook or diary of trips you’ve taken for work will do the trick.
Use a Logbook
The amount you claim is based on the percentage of each car expense used for business. This is worked out from a logbook that’s kept for no less than a 12-week period, updated every 5 years. By using a logbook, you can claim every expense that relates to the operation costs of your vehicle at the percentage you use for business purposes. Your logbook needs to keep a record of all business journeys you’ve made over a 12-week period, including:
- When the logbook starts and ends
- Odometer readings for the start and end of the period
- The total number of kilometres you’ve travelled
- The percentage used for business purposes
As part of each journey you add to the logbook, you need to include:
- Journey start and finish times
- Start and end odometer readings
- Number of kilometres travelled
- Why you made the journey
If you’ve made 2 or more journeys in a row on the same day, these can be recorded as a single journey. You’ll also need to keep any receipts for fuel, insurance, servicing and repairs for the year in order to justify your claim.