Are Buyers Agent Fees Tax Deductible: The Complete Guide for 2024

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Written by Aife Raveche 
on 7 Jun, 2024

Understanding Tax Deductibility and Buyer’s Agent Fees

At Raveche Property, we often get asked ‘Are buyer’s agent fees tax deductible?’. With property being one of the biggest expenses we make in our lifetime, it’s understandable that property buyers look to reduce expenses generated wherever possible. It’s important to understand the rules and guidelines from the Australian Taxation Office and what you need to know about purchasing property when it comes to yearly taxes.

Want to know how a buyer’s agent can help you with your next property purchase? Reach out to our Buyer’s agent in Melbourne.

Are buyer’s agent fees tax deductible?

Buyer’s agent’s fees are not immediately deductible. However, every client has a different financial situation. You cannot claim your buyer’s advocate fees as a tax deduction if you are purchasing a home to live in. If you’re purchasing an investment property, future tax deductions are possible. You can start by looking at tax benefits and creating a property investment strategy with your buyer’s advocate.

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Investment Property Benefits and Tax Implications

Can I claim my Buyer’s Agent fees as a tax deduction for an investment property?

When buying your investment property, you may use an investment property buyers agent to help you make a successful purchase.

Their total fee cannot be claimed immediately as a tax deduction in the year you purchase the property. However, the fees are included in your investment property cost base when calculating your gains and losses. When it comes time to calculate all expenses generated, include the buyers agent fees.

Always seek advice from a qualified tax professional to help your financial situation.

How buyer’s agent fees affect capital gains tax

Regarding the long-term benefits of buyers agent fees, capital gains tax is where it comes into play. You should seek advice from a professional to assess any tax benefit you can receive.

Maximising Tax Deductions for Your Property

What other expenses you can claim on a property is essential to know to get the best return to your bank account.

Claiming interest payments on mortgages

Your property must be used to generate income to claim interest payments on your mortgage at tax time. An example of this is rental income. If you are renting out your property, you can claim the interest portion of your repayments as a valid tax deduction.

Claiming maintenance work on your property

Your investment property may require occasional or ongoing maintenance work. Your property manager can connect with your tenants to organise when this is required. The cost of maintenance work (e.g., cleaning or regular gardening) can be claimed as a tax deduction.

Claiming asset depreciation on household appliances and fixtures

Household appliances and fixtures are considered depreciating assets in an investment property. This expense generated can be claimed as a tax deduction. If you want to claim these, you need to have a depreciation schedule — this is a report on the tax depreciation deductions you can claim on your investment property.

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The Role of Buyer’s Agent Fees in Property Investment

How buyer’s agent fees can benefit your property investment

A buyer’s agent is your expert to assist with your investment property purchase. Their access to off-market properties and insider knowledge of the property market can prove invaluable when finding the right investment for your financial goals.

Their expert knowledge helps determine how much value a property can give you. They can also prevent you from purchasing a problem property that incurs costs and results in capital loss.

A buyer’s advocate helps you through the entire process — from the property’s sale contract to connecting you with a reputable property manager. At Raveche Property, our expertise is always on your side to ensure you invest in a property with strong capital growth.

Reach out to us today to get started on your future investments!

Long-term benefits of buyer’s agent fees for investment properties

You can’t make an immediate claim on your buyers agent fees — but start looking long-term. When it’s time to sell your investment property, your buyers agents fees will be considered a capital expense. This means you’ll pay less tax on the profits you make from selling your property.

Not only can the buyers agent assist you in purchasing a worthy investment, but their fee can generate significant savings when you’re ready to sell.

Although never the desirable outcome, your investment property can sell for less than your purchasing price. If so, your buyer’s agent fees will be added to the capital loss. You can then use this to offset any future capital gains you generate, which means more savings!

See more on why a buyer’s agent can be worth engaging.

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A buyer’s advocate is there to work in your best interest. Their expertise and insider knowledge can help you purchase a worthy investment with long-term benefits. Their fee is not deductible at purchase time. Consolidate your capital expenses to save money when it’s time to sell. Ensure you are making valid tax deductions by consulting with a professional.

Frequently Asked Questions

Can you claim a buyer's agent fee on tax?

Using a buyer’s agent when purchasing an investment property can reduce your tax when it’s time to sell it. This is because the buyer’s agent fee is part of the cost base of purchasing the investment property, so they reduce capital gains tax when it’s time to sell the property. You should always seek professional advice and ensure you have the most up-to-date information from the ATO.

Are agent selling fees tax-deductible?

If you are selling an investment property, you can claim expenses such as depreciation, property management fees and agent fees you incur.

Can you claim tax agent fees on tax?

According to the ATO, any fees you pay to a recognised tax adviser are deductible in the year you incurred them.

Is a buyer's advocate tax-deductible?

If your property will be owner-occupied, buyer’s advocate fees are not tax deductible. However, a buyer’s advocate can save you on potential additional costs from purchasing a property in poor condition — a scenario they will help you avoid.

You should always seek advice from a qualified tax professional to make informed decisions and to ensure your buyer’s agent fees are tax deductible.

About the Author

Director & Officer in Effective Control – Vendor and Buyer Advocate Meet Aífe Raveche, your local Buyer and Vendor Advocate and the Director of Raveche Property. With more than a decade of experience in the real estate game, Aífe’s got the inside scoop on everything from property law to managing, selling, and even auctioneering property in both Queensland and Victoria. She’s not just about suits and contracts, Aífe is also the voice behind “The Property Files” podcast, where she sits down with other allied industry professionals and dishes out real estate wisdom with a side of humour and relatability. Aífe’s main mantra in business and in life is that everyone should have access to good and reliable information when it comes to property - she assists those around her to navigate through the often deliberately confusing landscape that is negotiation, asset selection and real estate.
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