Optimize Your Tax Deductions This Season

Essential Tax Deductions for Real Estate Professionals

As tax season draws near, it’s vital for real estate professionals to grasp the various expenses they can claim to maximize their deductions while staying compliant with regulations. The Australian Tax Office (ATO) has released a comprehensive guide offering essential tips and pertinent information tailored for the real estate sector.

Key Points on Deductions

To be eligible for a work-related expense deduction, you need to meet these conditions:

• The expense must have been paid out of your own pocket without reimbursement.
• The cost must be directly associated with generating your income.
• You must have documentation to substantiate the expense.

Remember, only the work-related portion of an expense is claimable. For example, if you utilize your personal phone or laptop for work, you may be able to claim a portion of the expense.

Working from Home (WFH)

If you are working from home, the ATO provides two methods for claiming your expenses:

1. Revised Fixed Rate Method: Claim 67 cents per hour for WFH, which covers internet, phone usage, electricity, and gas. This method does not require a designated home office space.
2. Actual Cost Method: Claim the actual expenses incurred due to WFH.

Ensure you maintain precise records of all expenses related to working from home.

Car Expenses

For those using their personal vehicles for work-related travel (such as visiting clients or traveling between jobs on the same day), there are two methods for calculating deductions:

1. Logbook Method: Determine the percentage of work-related use for all car expenses over the income year.
2. Cents Per Kilometre Method: Multiply the number of work-related kilometres driven by the rate per kilometre for that income year (85 cents per kilometre for 2023-24).

Note that commuting between home and your regular workplace is not deductible, regardless of the distance or time.

Additional Deductible Expenses

Real estate professionals can claim several other work-related expenses, including:

• Annual Certificate of Registration Renewal: Costs incurred for renewing your professional registration.
• Advertising: Expenses for promoting your services, including signage, newspaper ads, and letterbox drops.
• Phone and Internet: A portion of these costs related to work, supported by accurate records.
• Tools and Equipment: Items costing less than $300 can be claimed immediately, while those over $300 are depreciated over several years.
• Gifting: If you earn income from commissions, you can claim the cost of gifts purchased for work purposes, excluding entertainment gifts such as event tickets.
• Clothing: While conventional clothing is not deductible, expenses for compulsory uniforms or registered non-compulsory uniforms specific to your organization are deductible, including costs for purchasing, hiring, repairing, or cleaning these uniforms.

Importance of Record-Keeping

Meticulous record-keeping is crucial for a hassle-free tax return. Regularly collecting receipts, maintaining digital copies, and using tools like the myDeductions feature in the ATO app can help you keep track of claimable expenses.

By staying informed and diligently maintaining records, real estate professionals can fully benefit from the available deductions this tax season.

Understanding and applying these tax guidelines allows real estate professionals to maximize deductions and adhere to ATO regulations. Proper tax planning and thorough record-keeping can result in significant savings and a smoother tax return process.