Maximising tax returns is a surefire way to improve cash flow and optimise savings, especially among real estate agents and agencies.
According to a recent report from the Australian Tax Office (ATO), an average of $8,600 annually is claimed by real estate agents in the form of tax deductions, which is three times more than the national average and ten times more for shop assistants.
But wait!
Hold on to your horses before you raise your hands or scream in protest because to be fair with real estate agents, much of their expenses are work-related and fairly justifiable.
Unlike other lines of businesses, real estate agents are often overwhelmed with the sheer number of duties and obligations that are actually in accordance with the law and for compliance, which is why it is fitting to provide real estate agents with a good deal of relief from taxes through tax deductions.
These tax deductions are often overlooked and agents need to be aware so they can maximise their savings and increase cash flow.
Here are some of the most-neglected tax deduction items to consider and be conscious of.
Property presentation
When money is spent to prepare a property for an open house or those which have not been reimbursed by a client or agency, agents can file for deductions related to costs incurred for such.
These may include cleaning the house and property and costs for the purchase of home décor for use during the open house presentation.
Greeting cards and gifts
For agents who base their income on commissions, a tax deduction claim may be filed for greeting cards or gifts that are given away to suppliers, owners, or tenants in a rental property when engaged in a rental or property investment venture, provided these items are used for work-related purposes.
Gift items may include gift vouchers, hampers, flowers, pen sets, perfume, and even bottles of wine. Those excluded from the benefit are gifts such as tickets to movies, theatres, plays, amusement centres, sporting events, or holiday and vacation vouchers.
Advertising
If you are regularly advertising your real estate business you are entitled to claim tax deductions for costs incurred in advertising, provided you are a property manager or agent who is entitled to commissions and have not yet been reimbursed by the client or employer.
The claim is associated with expenses incurred for advertising in newspapers, signage, buntings and letterbox drops.
Marketing tools and equipment
Agents are entitled to file a tax deduction claim for marketing equipment used for the creation of work or business-related collaterals, particularly equipment purchased the prior year.
These include drone cameras, professional imaging photo or video cameras, and even VR goggles used for marketing purposes, which also include costs for having it repaired when damaged or broken during the process.
For equipment purchases of not more than $300 and are used exclusively for the business, the full cost of the item can be claimed. For equipment costing more than $300, claims may be filed for depreciation deduction.
Fees for tax agents
Those taking advantage of a registered tax agent or an online service to prepare for the previous year’s tax returns can file for claims on fees paid on the cost of managing tax affairs or section D10 of the tax return.
The same condition applies to fees paid or travel expenses in meeting up with a recognised tax advisor.
Briefcases, handbags, and satchels
Claims can also be filed for handbags, satchels and briefcases that are used to carry documents, and equipment such as laptops, tablets, or documents.
According to the Australian Taxation Office (ATO), it is necessary to maintain a journal or log of the time the items were used for work since it will be used to calculate the tax-deductible portion of the claims, according to the Australian Taxation Office (ATO).
Career development or enhancement costs
This is an often overlooked aspect of tax deduction claims. Self-education to learn or improve your craft through work-related courses or programs that improve your professional qualifications are entitled to tax deductions.
According to the ATO, training and education courses availed that maintain or improve specific skills or knowledge required for current employees or undertakings are entitled to deduction claims.
For agents, it includes marketing or investment training programs and real estate photography training. Just make sure to provide proof that the training or course will help in expanding your real estate business or career.
Industry publications or newspapers
Subscriptions to industry newspapers or magazines are tax-deductible, as long as these publications cater to content that is relevant to the real estate industry.
For newspapers, the deductible issues are allowed on days where the paper publishes property or real estate page supplements, not the entire subscription period.
Clothing
If you designate work-appropriate clothing or when your agency requires agents to a certain dress code or uniform apparel, tax deduction claims can be filed for the purchase and upkeep of those clothing items.
When filing your claims, attach documents such as receipts indicating the purchase cost, as well as for laundry and dry cleaning expenses. The same goes when these clothing items are brought in for mending or alterations.
Donations
For donations beyond $2 to any approved body or organization or a registered political party during the previous year, deduction claims may be filed for those. Make sure to provide a receipt when filing the claim.
Also, any net contribution of over $150 to any approved organization or fundraising event is also tax-deductible.
However, no claims can be made or approved for any donation made when you received something in return, such as novelty items, raffle tickets or other forms of items in exchange for the donation.
WFH or home office expenses
You are entitled to claim a percentage of running costs when working from home or maintaining your home office such as work-related phone calls, depreciation of furniture or home equipment, printer and printer perishables, internet services, and basic utilities such as power, heating or cooling and lighting expenses for your home office.
It works similar to acquiring marketing equipment, purchasing home office supplies and equipment or furniture for work-related functions are tax-deductible, as well. For items costing more than $300, it can be filed for depreciation deduction.
Transportation and travel expenses
If you own a car and use it for work, you are also entitled to certain expenses such as work duties, attending conferences or meetings related to work, traveling between separate jobs on the same day, driving to and from an alternate workplace for the same employer and performing itinerant work.
These are the most common tax-deductible claims that can be helpful to agents, so when in doubt, get in touch with the ATO to help provide support or guidance in making or filing these claims.