There are some common
mistakes made in claiming
rental property agent fees
and commissions. Getting
it right when you prepare
these claims saves you
time later. It could also
reduce the chance that
your clients’ returns are
selected for audit or
review.

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 for
the rental property on behalf of
the owner.
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 –
for example, management fees
that also include cleaning costs.
Getting it right
Examples
Commission on sales
Mia sells her rental property and pays an
agent sales commission of $9,800. As
this commission is charged on the sale of
the property, Mia can’t claim a deduction
for this expense as a property agent fee
or commission. However, Mia can add
$9,800 to her cost base, which she uses
to work out the capital gain or loss when
she sells the property.
Agent fees for finding
a rental property
ABC Enterprises is a specialist company
that finds investors suitable rental properties
to purchase. Mark sees one of ABC’s ads
in the paper and decides to engage them
to find him a rental property. ABC charges
Mark $1,200 for services for the property
they find, which he subsequently purchases.
Mark cannot claim the fee he pays to ABC
as a property agent fee or commission
deduction. However, Mark 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.
Apart from management fees, agent
fees or commissions sometimes include
other expenses relating to a rental
property, including cleaning or repair
costs. If this is the case, rental property
owners should ask their property agent
to itemise the various expenses.
Separating management fee
amounts on a monthly/annual
statement
De Anna’s monthly statement from
XYZ Realty for ‘agent commissions’
includes a component for managing her
holiday letting on her behalf and also for
the cleaning costs of her unit after holiday
makers vacate. To correctly claim her
rental property deduction, De Anna should
ask her property manager to itemise the
agent commission amount to show the
management fee and cleaning cost
separately. She can claim the
management fees as a deduction at the
property agent fees or commissions label
of her rental schedule. However, she must
claim the cleaning expenses separately at
the cleaning expenses label.
Property or agent fees can only be
claimed if they are paid to a
legitimate entity or person who is
genuinely managing the rental
property. The best evidence your
clients can keep are their statements
from their property agent.