Purchasing a car as a real estate agent

Discussion in 'Accounting & Tax' started by ThaRealJaySnell, 12th Aug, 2019.

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  1. ThaRealJaySnell

    ThaRealJaySnell Active Member

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    Hi all
    i havent been able to find much information on this and only can find stuff if you have a small business.

    I was previously in real estate and went to back uni, now with uni almost finished i am going back into the real estate and need to purchase a car.

    I will receive a car allowance from work of about $140 a week. is that just for the ongoing use and maintenance of a car? or does is cover the potential purchase of a car aswel.

    My 3 options were as follows

    Buy a car with the money i have plus a little extra from the sale of my previous car

    Use the money from the sale of my car and finance to source a newer car

    or completely finance the above or a brand new car.

    My question come tax time can all the above scenarios deduct the purchase of the car when doing the tax refund ?

    Which would be the best scenario to make sure i am utilising my funds best.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Ask your accountant about the tax question
    Ask your broker about how this will impact on your borrowing capacity
    Ask you employer how they will pay it (novated lease, cash supplement to your salary, in little brown paper bags etc)
     
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    You will need a logbook to determine the work related %
    Then you will need to understand the likely annual total operating costs incl depreciation and interest in each case. The newer the car and its cost the more this may be.

    No you cant deduct the purchase of a car. It is depreciable and you fail to meet any small business tests for the immediate write off. The interest element if any will make a trivial impact but a car loan may impact servicing etc later.
     
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  4. ThaRealJaySnell

    ThaRealJaySnell Active Member

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    OK so i cant write off the purchase.

    So essentially if i am getting the $140-180 from my job (which is regardless of what i do). i cant claim any further costs due to the fact work is already covering it. the same as if i couldnt claim laundry because work already covers it.
     
  5. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    That makes no sense. Work will be paying for you to run the car. They pay you an allowance for YOU to buy fuel and for you to use your own car. Your allowance is assessable and the deduction is the logbook % of costs incurred.

    Real estate agents cant claim laundry. Or clothing. It is not a uniform of the type permitted deductibility and is not protective etc. Its general clothing.

    Another typical cost you may also incur may include a % of mobile use.
     
  6. ThaRealJaySnell

    ThaRealJaySnell Active Member

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    Sorry the laundry quote was an example or comparison.

    I mean because some job have laundry included in there pay it means laundry cant be claimed tax time.

    Does this mean because i get a car allowance from work that i cant make any deductions based on my car ?
     
  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    You have it all wrong.

    If you receive a car allowance it is assessable income. But it likely means you can claim a deduction to offset the income. The deduction may be based on cents per KM or a logbook depending on your records. The deduction could be more or less than the allowance.

    Same applies to a employee who receive a uniform allowance

    eg Karen is a Army corporal. She receives a $268 uniform allowance. She spends $150 a year based on ATO accepted washing rules on laundry. She also purchased $260 of uniform replacements as her other shirts were looking worn. She also purchased another set of boots for $139 and spends $59 on boot polish etc. Karen will report the $268 allowance received and claim a deduction for $608.
     
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  8. Mike A

    Mike A Accountant Business Member

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    if your car is used for income producing purposes you might be able to make a claim.
     

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