Don’t forget these tax deductions!

by Olivia D'Orazio29 Oct 2014
For the Seinfeld fans out there, this one’s for you: like Kramer, understanding how to “write it off” is complicated and confusing, but we spoke with tax experts – “and they’re the ones writing it off!”

“The real estate agent is a self-employed individual and may claim business expenses,” says accountant James Walker, who specializes in taxes for real estate agents. “A business expense is any expense incurred for the purpose of earning income, so that sets the criteria [for what is deductible].”

Deductible expenses can run the gamut, from business cards and flyers, to website costs and association membership dues. But there are also a lot of deductible expenses that agents often forget, the greatest of which is your car.

“The caveat, however, is that while they can usually track all expenses – gas, car payments, insurance, parking, all the expenses related to that – they have to track the mileage that they drive in order to be able to deduct the expense,” says tax accountant James Walker. “So what Canada Revenue Agency requires is evidence to show the car was actually used for business.”

Walker says agents should get into the habit of making note of the mileage at the start and end of each work-related journey – and no, you can’t just guesstimate.

“If they do not have that evidence and … they are audited, Canada Revenue will disallow all their vehicle expenses,” Walker says. “So tracking mileage is a very important aspect.”

While you technically do work out of your brokerage’s office, many agents also have home offices, which are also tax deductible. However, that office has to be separated from the rest of the home and must be set up such that a client could be hosted in the space.

“It doesn’t mean that [clients] have [been hosted there], but [agents] have to have it set up that [clients] could [be hosted there],” Walker explains. “[The office] can’t be at the end of the kitchen counter or in the dining room.”

In this case, agents can track the proportion, or the square footage, of the office compared to the rest of the house and deduct an appropriate amount of the mortgage and the various bills, like heating, electricity and water.

“[Agents] will get a proportion of home office expenses,” Walker says. “Any expense they incur related to their business would be a deductible expense.”


  • by Vera 10/29/2014 4:52:16 PM

    They can't claim both offices...if you are writing off expenses at the actual office, then you can't also write off a portion of the house too.


Is a Toronto foreign sales tax a good idea?