If you’re one of New Zealand’s 15,000 or so real estate agents, you’re able to claim expenses each year to offset against your income. These might include things like the cost of running your car, your phone and your home office. Taken together these can significantly reduce your tax liability.
However, Inland Revenue (IR) thinks some real estate agents are claiming expenses which aren’t in line with their incomes – resulting in these agents paying too little tax. In March, the IRD announced it was planning to target real estate agents: “Inland Revenue believes the issue is widespread and we must act.”
They will be focusing on both under-reported income and overstated expenses as part of their push to ensure everyone is paying their fair share of tax. The agency is also overhauling its computer systems to help it track down disproportionate expense claims and under-reported income.
Getting it right
The best way for you to ensure you’re always accurately claiming expenses is to have clear records. That means always having access to bank statements, invoices from your phone provider and other invoices that show your costs – the power bill and insurance statements, for instance. You should also be keeping a logbook for your vehicle – there are some excellent apps that make this super easy.
Inland Revenue plans to visit real estate agencies and provide information and presentations on how to get it right. If you get a chance to attend one of these presentations, it should be worth the effort.
We’re here to help
Not sure if you’re claiming too much or too little? We’re here to answer all your questions about claimable expenses for your real estate business. Give us a call today.
– This post was originally published / written by BOMA and has been updated for freshness, accuracy, and comprehensiveness