Selling the Dream, Claiming the Reality: The Ultimate Tax Guide for Real Estate Pros

Welcome, to the Podcast! Our newsletter made easy! Please note, this podcast features AI-generated voices for your hosts, Mia Taylor and Leo Baker, bringing you expert insights from owner, Ben De Rosa, at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax – whether it's for your individual finances, or the complexities of your business. We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. So, if you're looking to understand your obligations, maximize your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week! This one is a classic. "Agent Chris" from Balcatta writes: "I used to think my shiny blue suit was a tax deduction because I only wear it to auctions. Ben at Aevum sat me down, gave me the hard truth, and then found me three times that amount in car claims I’d been missing. These guys are the real deal." Thanks, Chris! And you’ve perfectly set the stage for today. Episode 26 is dedicated entirely to you: the Real Estate Professionals. The property managers, the sales agents, and the directors who keep the Australian dream alive. Real estate is a high-octane world, Leo. It’s all about the "hustle." But as Ben often says, if you hustle for the ATO without knowing the rules, you’re just working for free. Today, we are unpacking the ATO’s Tax Time Toolkit for Real Estate Professionals. We’re talking wheels, wardrobes, and the "commission" trap. Let’s start with the "Three Golden Rules" for claiming work-related deductions. We mention these every week because they are the hill your tax return lives or dies on. That's right. Rule one: you must have spent the money yourself and weren't reimbursed. Rule two: it must directly relate to earning your income. And rule three: you must have a record to prove it. Simple, right? Well, not always. Because in real estate, "relating to your income" can feel like a very broad category when you're effectively on call 24/7. Let’s start with the biggest expense for almost every agent: The Car. Agents live in their cars. You’re driving to appraisals, staging appointments, and the local coffee shop for client meetings. But here is the first "red flag": you generally cannot claim the cost of normal trips between home and work. Even if I live a long way from the office or I'm working a twilight open home at 8 at night? Even then, Leo. The ATO sees that as a private commute. However, as an agent, you probably have what we call "shifting places of employment." If you have no fixed place of work and continually travel from one work site to another throughout your day, you may be able to claim those home-to-work trips in limited circumstances. And there are other clear "green lights." You can claim travel directly between separate jobs on the same day—like going from your first job as an agent to a second job as a musician. Or driving from the office to residential open homes. You can even claim travel from home directly to an alternative workplace, like going to a training venue for a work-related training course. Now, you have two choices for calculating the claim: the logbook method or the cents per kilometre method. If you’re a high-mileage agent, the logbook is usually your best bet. It’s a 12-week commitment that sets your business-use percentage for the next five years. And remember, you can't double-dip. If you use one of those methods, you can't claim further deductions in the same return for petrol, servicing, or insurance. It’s all baked into the method. Alright, let’s move to the most controversial topic in the real estate lunchroom: The Suit. Oh boy. Every year, an agent walks into Aevum with a receipt for a $2,000 Italian wool suit, convinced it’s a deduction because "presentation is everything." And every year, Ben has to be the bearer of bad news. Correct. With very few exceptions, clothing cannot be deducted. The ATO is incredibly strict here. You can't claim the cost to buy, hire, repair, or clean conventional clothing, even if your employer requires it and you only wear it at work. Conventional clothing being business attire, right? Exactly. To claim clothing, it must be a compulsory uniform—meaning you are explicitly required to wear it by a workplace agreement or policy that is strictly and consistently enforced. It also has to be sufficiently distinctive to your organisation—think a shirt with a very prominent company logo. What if it’s a non-compulsory uniform? Some agencies have branded gear that isn't strictly mandated. Then it has to be on the Register of Approved Occupational Clothing. Check with your employer if you're unsure. And if they pay for the clothes or reimburse you, you can't claim a thing. Let’s talk about the home office. A lot of agents are doing their admin and prepping contracts from their kitchen table late at night. You can claim running expenses you incur directly as a result of working from home. But you must use one of the ATO's approved methods and keep the correct records. And there's a "naughty list" of items you definitely can't claim for the home office. That's right. No claiming for coffee, tea, milk, or general household items—even if your employer provides them at the office. You also can't claim anything related to your children's education, like their iPads or online learning subscriptions. And no claiming the decline in value for items your employer provided, like a work laptop or phone. Or anything they reimbursed you for, including the cost of setting up the home office. Now, let's talk tech. Every agent has a phone, a tablet, and maybe high-end cameras or laser measurers. Tools and equipment are great deductions, but the $300 rule is the divider here. Exactly. If it costs $300 or less, you can generally claim an immediate deduction for the whole cost. If it's more than $300, you claim the deduction over several years as it declines in value. And remember, if you use your personal tablet to show floorplans 70% of the time, but the rest is for private use, you can only claim the work-related portion. Also, you can't claim anything supplied by your employer. Now, Leo, we need to talk about "The Gift." The hamper for the seller, the Moët for the buyer. This is a huge part of the "Closing the Deal" culture in real estate. It is. But there is a massive "Commission Trap" here. You can only claim a deduction for gifts if you are a salesperson or property manager entitled to receive your income from commission—or a mix of commission and a retainer. Wait, so if I’m a junior agent or admin on a fixed income with no commission, I can't claim those gifts? Nope. The ATO sees that as a private expense or the employer's responsibility. Also, you can never claim a gift that is "entertainment." No footy tickets, no restaurant vouchers, no theater passes. What about advertising? The bus stops, the billboards, the flyers with your face on them? Same rule! You can claim the work-related portion of advertising your services—newspapers, letterbox drops, signage. But again, you can't claim this if you earn a fixed salary and aren't entitled to commission. Alright, let’s go through the "Quick Fire" list of what you definitely cannot claim. Number one: private expenses like your driver's licence. Number two: grooming—that’s hairdressing, cosmetics, or teeth whitening. I don't care if you're appearing in videos; it’s a private expense. Number three: fines. Parking tickets while you were at an appraisal? Speeding to get to a settlement? Those are on you, not the ATO. Number four: music subscriptions or childcare. However, you can claim the cost of renewing your annual Certificate of Registration. And finally, phone and internet costs are claimable, but you must have records showing your work-related use percentage. This is why it’s so important to have a professional in your corner. Real estate agents are high-risk for the ATO because their deductions often look "lifestyle-related." Exactly. At Aevum Accounting, we specialise in drawing that line clearly so you stay compliant while maximising your return. We want you to focus on selling houses, not defending an audit. That’s a wrap on Episode 26! To all the real estate pros out there—stay savvy with your records. Use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. We hope today's discussion has provided you with valuable insights. Before we go, a quick but important reminder: The information shared today is for general informational purposes only and does not constitute specific tax or financial advice. Everyone's situation is unique, and tax laws are complex and constantly evolving. For personalized advice tailored to your specific needs, we always recommend consulting with a qualified professional. You can connect with Ben and the team at Aevum Accounting. Visit our website to learn more about our services, including detailed tax guides for various occupations, and how we can support your financial journey. Thank you for tuning in! If you enjoyed this, please subscribe, leave us a review, and share it with your office. Until next time, stay savvy, stay proactive, and keep building your financial future! From all of us at Aevum Accounting, goodbye for now!