If you’re a Real Estate Professional and you pay tax on a PAYG basis, then it pays to learn what you can claim at tax time if you want to legitimately minimise the tax you have to pay, or maximise your tax refund.
The important thing to remember is in order to claim a deduction for work-related expenses:
- you must have spent the money yourself and weren’t reimbursed
- it must be directly related to earning your income
- you must have a record to prove it.
You can only claim the work‐related part of expenses, which means you can’t claim a deduction for any part of the expense that relates to personal use.
NOTE: The Australia Tax Office has created a downloadable 1-page Tax Deduction Checklist for Real Estate Professionals you can keep and refer back to anytime.
To grab your Free copy, Click Here To Download The Deduction Checklist For Real Estate Professionals
Here’s a summary of the type of deductions you can normally claim as long as you have proof of your claim:
You can claim a deduction when you:
- drive between separate jobs on the same day – e.g. travelling from your real estate agency to your second job as a waiter
- drive to and from an alternate workplace for the same employer on the same day – eg travelling between two different residential open homes
You generally can’t claim the cost of trips between home and work, even if you live a long way from your usual workplace or have to work outside normal business hours, for example to attend a weekend auction.
There are limited circumstances where you can claim the cost of trips between home and work, such as where you carry bulky tools or equipment for work, such as a large ‘for sale’ sign and the tools to erect it. The cost of these trips is deductible only if:
- your employer requires you to transport the equipment for work
- the equipment was essential to earning your income
- there was no secure area to store the equipment at the work location, and the equipment is bulky – at least 20kg or cumbersome to transport
If you 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 travel expenses if you have to travel overnight from your usual work location, for example traveling to a remote area to inspect a property, provided the cost was incurred while carrying out your work duties.
Travel expenses may include meals and accommodation, fares, petrol and incidentals such as parking fees and tolls.
Receiving a travel allowance from your employer does not automatically entitle you to a deduction. You still need to show that you were away overnight, you spent the money yourself, and the travel was directly related to earning your income, in other words, it was not a personal expense.
Clothing And Grooming Expenses
You can claim a deduction for the cost of buying, hiring, mending or cleaning certain uniforms that are unique and distinctive to your job eg clothing items you’re required to wear which have a logo that is unique and distinctive to your employer.
You can’t claim a deduction for the cost of buying or cleaning plain clothing worn at work, even if your employer tells you to wear it and even if you only wear it for work, eg black pants and a white shirt.
You can’t claim a deduction for hairdressing, cosmetics, hair and skin care products, even if your employer tells you to use them, or you are required to be well-groomed.
Home Office Expenses
You can claim a percentage of the running costs of your home office if you have to work from home, including depreciation of office equipment, work-related phone calls and internet access charges, and electricity for heating, cooling and lighting costs.
If you are required to purchase equipment for your work and it costs more than $300, you can claim a deduction for this cost spread over a number of years (depreciation).
You generally can’t claim the cost of rates, mortgage interest, rent and insurance.
Other Common Deductible Work Related Expenses
Other expenses you can claim a deduction for include:
- marketing equipment, for example the work-related portion of cameras used for property photos
- decorating properties – e.g. flowers
- renewing your annual Certificate of Registration
- union and professional association fees
- technical or professional publications
You can claim a deduction for the cost of gifts – e.g. alcohol, flowers – bought for work purposes if you are a salesperson or property manager entitled to receive your income from commission or both commission and retainer.
You can’t claim a deduction if you earn a fixed income and you are not entitled to earn a commission.
You can’t claim a deduction for gifts that are in the form of entertainment, for example a live sporting event.
What we’ve covered in this post gives you a general summary of what you can and can’t ordinarily claim, but knowing about these deductions is only relevant for you after the end of the financial year.
Why Should You Do Your Tax Planning Well Before The End Of The Financial Year?
The reason for getting your tax planning done as early as possible is that once June 30 comes around, you can only record what you’ve done during the year, and then complete your tax return based on that.
Everything has been earned, and the money has usually been spent or invested. There’s not a lot you can do in July to legitimately minimise your tax liability for the previous financial year.
That means you need to decide on a strategy as soon as possible, and then implement the tax planning recommendations your advisor gives you before the 30th of June if you want to legitimately maximise your income and minimise the tax you pay.
When you don’t do this planning, you’re missing a great opportunity when you’re having your tax return prepared. That’s why rather than waiting until the end of the financial year, you should see us to book a planning session as soon as possible.
When you do there’s a very good chance you’ll be able to pay less tax, so you can keep more in your pocket for important things like holidays or travel, your hobbies or other things you want to do, or maybe paying down your home loan to give yourself a savings buffer for the future.
But if you leave it too late, there’s nothing your advisor can really do to help. So even if you are not thinking of moving jobs, changing careers, or retiring right now, it’s never too early to sit down with us and make a plan for your future.
Register For A Complementary Assessment Session
Each month we hold a limited number of complementary Assessment Sessions where you can get to know us, and we get to know about you and what you would like to achieve. Then together we can often come up with clever ways we might be able to help you.
Would you like to join us for one of these sessions?
If you’d like to schedule one of these complementary, obligation free one-on-one sessions, even if you’re just curious and you’re not sure what to do right now let me know by using this contact form or give us a call on 1300740066 and we’ll set things up for you.
I’m really looking forward to meeting with you,
James Huy Vuong
P.S. You really owe it to yourself and your family to maximise your legacy while you’re still working, and saving as much tax as possible is one great way to do that.
Give us a call on 1300740066 to book your Assessment Session now, or let us know by using this contact form and we’ll add you to our calendar.
* This post is a general summary only. For more information, go to ato.gov.au/occupations
* You can use the ATO app myDeductions tool to keep track of your expenses and receipts throughout the year.