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Rental property claims

Avoiding common mistakes

The ATO has identified some common mistakes being made in claiming rental property agent fees and commissions.

What are property agent fees and commissions?

These are fees such as regular management fees or commissions paid to a property agent or real estate agent for managing, inspecting or collecting rent on behalf of the owner. They can only be claimed if they are paid to a legitimate entity or person who is genuinely managing the rental property. The best evidence for this are the statements the owner receives from their property agent.

Common mistakes

The ATO has identified the following three common mistakes:

  • Claiming commissions or other costs paid to a real estate agent or other person for the sale or disposal of a rental property.
  • Claiming fees paid to any entity or person engaged to find a suitable rental property to purchase.
  • Incorrect labelling of management fees which include a number of expenses rolled into the one amount. These might include management fees that also include cleaning costs.

Example

Property Enterprises is a specialist company that finds investors suitable rental properties to purchase. George sees one of their advertisements in the paper and engages them to find him a rental property. Property Enterprises charges George $1,200 for their services to find a property which  he subsequently purchases.

George cannot claim the fee he pays to Property Enterprises as a property agent fee or commission deduction. However, he can add this $1,200 expense to his cost base, which he uses to work out the capital gain or loss when he sells the property.

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