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Real Estate Agent Tax Facts

At Xebra, we work closely with New Zealand leading real estate brands and we are familiar with the day to day issues that their agents face.

We make staying ‘on top’ of your tax compliance requirements as a Real Estate Agent simple and easy. 

  1. You simply need to Join XebraTax as a Real Estate Agent client where you pay a low monthly fee of $89 + GST
  2. You will be assigned your personal XebraTax Advisor.
  3. Your Xebra Advisor will set you up online using the Xero Accounting Software or transfer your existing License over to XebraTax;
  4. We connect your business bank account to your Xero accounting software.
  5. We will enter or update all your income and expenditure transactions for this financial year in your Xero software.
  6. We will continue to do all your income and expenditure data entry and bank reconciliations each month as part of your monthly subscription
  7.  We will produce any GST returns, if needed, and produce your annual set of accounts as required and give you regular updates as to your tax status. 

All you need to do is set up a business bank account and put all your business transactions through this business account. XebraTax will do the rest of the Tax compliance work.

Real Estate Agents

$8900monthly Incl GST.
  • Xero Subscription
  • GST Returns if needed
  • Automatic Bank Feeds
  • Personal Xebra Advisor – Xero Certified
  • Bank Reconciliations Every Month
  • Profit and Loss Accounts Every Month
  • Tax Liability Reports and Reminders When Due
  • Annual Accounts
  • Ad Hoc Routine Enquiries

So what can you claim tax relief on?

Here is a summary of some of the Real Estate Agents tax facts.

Income and Withholding Tax

The commission received by a real estate agent is subject to a 20% withholding tax deduction. The Real Estate firm deducts this from the amount paid to your bank account and pays it to the Inland Revenue. The advantage to you, the agent, is that your income tax is pretty much covered for the year and indeed is highly likely to result in a refund.

Goods and Services Tax (GST)

The question that all agents starting out in real estate ask is should I be registered for GST. The commission the agent received is treated as a taxable supply (Basically sales) for GST purposes, although compulsory registration is only required when the annual sales are greater than $60,000. However, at Xebra we believe that agents earning under this amount should still seriously consider a voluntary registration as it means that they are able to deduct GST on their expenses and fixed assets such as your motor vehicle. Refer to the rest of our Real Estate Agent Tax Facts. If you are unsure contact us on enquiries@xebratax.nz, or call us on 0800 110 160, however for the purposes of these Real Estate Agents Tax Facts we will assume that you are registered for GST.

As Real Estate Agents are self employed they are able to claim a tax deduction on various costs. The following are our suggestions on what they might be.

Entertaining

If you meet a prospective customer, business colleague or service provider for a quick lunch and coffee near your offices, 50% of this cost can be claimed against income tax (and 50% of the GST recovered). If you are out of town and you need to get a lunch then 100% of this could be claimed.

Printing and Stationery

The cost of your business cards or other branded stationery may be provided by the real estate firm and deducted from your next commission statement. This will of course be tax deductible. However, it is likely that you will have a printer at home and the cost of this paper and ink cartridges can be claimed, so keep those receipts.

Telephone and Internet

The cost of your mobile telephone can be claimed 100%, and you can also claim a proportion of your home telephone and internet. This proportion needs to be thought through, although in a lot of cases it will be at least half (if not more). At Xebra, we recommend that these payments are made from your business bank account so that the cost can be captured simply and the appropriate apportionment made.

Gifts to Clients

The giving of gifts is a great way to say thank you to clients (both sellers and purchasers). The cost of these are fully deductible for income tax and GST purposes.

Use of Home Office

A big part of the real estate agents role involves working from home. When this is the case the Inland Revenue Department allow a deduction for the cost of this. You will need to work out the area of your private home (whether owned or rented) that you use for this purpose. Say you decide that 15% is a reasonable proportion for business use, then you can claim 15% of household rent, mortgage interest, insurance, power, cleaning etc etc.

Second Hand Goods

For the real estate agent just starting out, don’t forget that you can claim GST and depreciation on assets that were used for private purposes, that are now used for business. Commonly this could be a laptop that you acquired before starting out and you will use for the real estate business. GST can be claimed on the market value of the laptop. For example, you brought a new laptop six months before you started your real estate agent career and it cost $1,900 (incl GST). When you started out the value is estimated to be $1,500. This means you can claim GST of $195 in your first GST return. The same would apply for your mobile telephone, office desk etc.

Motor Vehicle

This is likely to be one of your largest costs and needs careful consideration. It is also a complex area and may need some specific advise when you first start out. Xebra has a fact sheet specifically for this topic which you will find on our website.

Work Related Clothing

In order to claim a tax on clothing worn for work purposes, it must be branded and also the type of clothes that would not be worn for other purposes. For example, a polo shirt with your name and brand prominently displayed would be taxed deductible. However a smart winter coat purchased for open homes on cold and wet days would not. Some people would see this is a bit unfair, especially if the coat is only used for open homes, however the Inland Revenue Department rules are clear on this delicate subject.

Find out more about our Real Estate Agents Accounting and Tax Compliance service. Call us on 0800 110 160 or Click on “We’ll call you back” in button.

“We’ll call you back!”