Buyers advocate fees Tax deduction.

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From: David Simon


Can we claim the fees of a buyers advocate as a tax deduction or is this a capital expense in purchasing the property?
 
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Reply: 1
From: Dale Gatherum-Goss


Hi David

It is a capital expense in buying the property. It will reduce your CGT in the future but not your immediate tax.

Dale
 
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Reply: 1.1
From: Dale Gatherum-Goss


Hi Mark

At the risk of being difficult, I disagree with you vehemently. In fact, I would suggest that your comments show a marked ignorance of income tax law.

Accountancy and financial advice involved in the purchase of an investment remain a capital cost and not an expense to reduce your income under Section 8-1 of the 1997 ITAA.

There is a large body of case law that further reinforces these facts.

Whilst I appreciate that you are looking for an advantage for you and your clients, may I suggest that you get your facts right before you blast away in a public forum. Please remember, people may innocently rely on your"advice" and find themselves in trouble in the process.

Dale
 
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Reply: 1.1.1
From: Mark Pardi


Dale

A very rapid and "strong" response.

At no stage did I ever say it was tax deductible.

At no stage did I disagree with your comments !!


At no stage did I say it was accountancy advice or financial advise......I was pointing out the grey area of "our" industry

I have had various accountants and tax gurus argue the toss both ways regarding "buyers agents fees"

Frankly.....I am not a tax specialist.....nor do I profess to be one !!

Nor am I licensed to give tax advise.....nor would I give such advice.


However I am surrounded by accountants and can assure you I am far from ignorant re tax laws....(but you are entitled to your thoughts on me if you desire.)

Hence why we always advise all our clients to seek complete and thorough taxation advise regarding all aspects of their tax position.

We also regularly direct our clients to the ATO website.

Additionally whilst we want maximise as many benefits and situations for our clients...we will never advocate anything outside the laws that govern our industry.

I also think there is no need to post responses like you have......no one really has a point to prove in this case......I was merely posting an overview of what we encounter every day as a"buyers agent" and making a point about how there is a grey area within our industry.

I was hoping to encourage some more positive "chat" regarding the subject.

I have received many many e-mails to my personal account from forum members encouraging me to post regularly

(Why I bother is beyond me sometimes.)

Is your fee deductible ?? is a question we get asked every day !

Mark Pardi
 
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Reply: 1.1.1.1
From: Dale Gatherum-Goss


Hi Mark

Thank you for your extra thoughts. . . .

I apologise if you found my directness offensive. I get annoyed when real estate agents mislead people and I do appreciate that you are not a real estate per se.

Discussion is good but not when it misleads innocent people.

Have fun and keep trying

Dale
 
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Reply: 1.1.1.1.1
From: Kristine .


Dale

When Mark first appeared on the forum I raised some generic comments regarding requirements for anyone involved in real estate transactions to be licensed and posed the question regarding NSW law.

Mark, not perhaps realising that this is a favourite subject of mine, mistakenly thought that I was being critical or sarcastic, and took the trouble to email me directly, pointing out in succinct detail that he and his company are, in fact, licensed estate agents.

So your comment ... >I apologise if you found my directness offensive. I get annoyed when real estate agents mislead people and I do appreciate that you are not a real estate per se <. ... may be timely in that it is easy for unlicensed, unqualified etc of any trade or profession to make comments out of hand. Having an opinion doesn't make it fact.

I appreciate that you have quoted detailed reference to support your comment regarding financial advice (< Accountancy and financial advice involved in the purchase of an investment remain a capital cost and not an expense to reduce your income under Section 8-1 of the 1997 ITAA. >), as I would certainly have expected that purchasing costs of any kind - broker's fees, bank costs, legal etc, would have been able to be written off over the first five years.

Does, then, a procurement fee constitute accountancy and financial advice, which could be of a general nature and not specifically linked to the actual purchase? If the services are performed by and charged for by a licensed estate agent, how could these actions be determined as accountancy or financial advice? The PIA software makes provision for the writing off of various setting up expenses. Can you refer me to any of these test cases where consultant's fees have been disallowed as an expense and directed to be capitalised?

By the way, I can't find the post which inspired your reaction. Has it been deleted? I wish someone would figure out how to delete the hackers post made under my name last week. Serves me right for having a mug's password (which I've now changed and even Freud would have trouble hacking this one!).

And as a final point, it's nice to see a little fiery discussion back on the forum. Things were getting a little bland, but please everyone, don't forget your party manners.

Warm and fuzzy feelings to all

Kristine
 
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Sim

Administrator
Reply: 1.1.1.1.1.1
From: Sim' Hampel


On 5/8/02 10:32:00 PM, Kristine . wrote:
>
>I wish someone would
>figure out how to delete the
>hackers post made under my
>name last week.

Okay Kristine... try clicking on the following link...

http://bne003w.server-web.com/~wb013/delete?35348,30

... it should delete that message for you if it really was created using your userid.

Magic huh ?

BTW. no-one else should be able to delete it - only you !

sim.gif
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2
From: Ross Sondergeld


Hi,


Subject: Buyers advocate fees Tax deduction.


Hmmm...

But you also need to remember that a "Buyer Agent" can charge a few
different ways.

In simple terms, the payment of commission is a matter of contract law, not
agency law. Therefore.... buyer agents can be paid directly by the buyer or
by teh seller. It all depends what the "buyer agency agreement" says...

How do I charge... Even i don't know...

Sometimes i get duded by everyone... (i.e. open buyer agency agreements)

Sometimes a get a flat fee... (i.e. $5,000)

Sometimes i get a 50% fee split from the listing agent (with a buyer agent
clause inserted into the sale contract.)

Sometimes i get paid directly by the buyer... (i.e. 7 of prchase price)

Sometimes i get paid 100% of teh max fee in QLD from teh seller. Based on
teh special conditions within the sale contract.

Basically, it all depends what the compensation clause within the buyer
agency agreement says...

But don't forget i'm in Queensland...


P.S. Please don't argue with me about how and whom pays the buyer agent...
(i've spent years in US forums debating the issue...)



Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


_________________________________________________________________
Send and receive Hotmail on your mobile device: http://mobile.msn.com
 
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"Buyer agent, seller agent, non-agent... = R/E AGENT"

Reply: 1.1.1.1.2
From: Ross Sondergeld


Hi dale,


Buyer agent, seller agent, non-agent... = R/E AGENT

I thought Mark was a real estate agent?

Buyer agent, seller agent, non-agent... either way you're legally required
in every state of Australia to have a real estate license... to be involved
in other people's real estate dealings.



Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


_________________________________________________________________
Send and receive Hotmail on your mobile device: http://mobile.msn.com
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1
From: Mark Pardi


Ross

How are you

Yes I am a real estate agent as per my Licence on the wall.

and I hold the corporation licence.

so thats the licence rundown.

Sorry to hear you struggle at times for your fees.

Mark
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1
From: Debra L


Upon advise from my ex-accountant I claimed a consultancy fee on the purchase of one of my IPs.

At the time I was trying to cover all bases, so I rang and spoke to a gentleman at the ATO, who advised me that I could claim them as an expense.

OK - So the buyers agent said they were deductible.
My accountant said they were deductible.
The guy at the ATO said they were deductible.

So I claimed them. And two years down the track when I was selected for an audit - the ATO rejected the deduction and sent me a bill to pay back the refund I had received from the year I had claimed it.

I gave them a written explanation of what had occurred, and they generously decided not to fine me on top of the repayment, as they agreed that I had not purposely misled them.

The moral of this story is - you need more than a second and third opinion!

P.S. When I originally pointed out to the auditor that my accountant (who handled many of the clients of the buyers agent) had told me that all his other clients were claiming the agents fee, and that some had been audited and it was all ok - He told me that he was aware of these other clients and NONE of them were allowed these deductions.

Hey - I think that was why I got a new accountant.


Debra
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1.1
From: Mark Pardi


Debra

Thankyou for sharing that experience

Sorry you got audited.........but your story really helps forum readers understand the issues that surround Property Investors.

regards

Mark
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1.1.1
From: Dale Gatherum-Goss


Hi

My reference to accounting and financial advice were more of an example. I apologise for not being specific and mentioning the other costs/issues.

All costs incurred in buying a property are part of the cost base for CGT purposes and not tax deductible as I hope that we have now established.

Have fun

Dale

Ps Mark, I now appreciate that you are a real estate agent. I apologise.
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1.1.1.1
From: Kristine .


Hello again,

Does this mean that the PIA software should not include a section for the writing off of establishment costs over the first five years?

Are there exemptions to this? Are some establishment costs allowable as costs, and the others as a cost to be capitalised?

Or are all costs to be capitalised? This would have immediate implications for deals which are purportedly negatively geared with a positive cash flow.

More specific information and precedents, please. Particularly for costs such as bank charges and loan establishment fees.

Thanks

Kristine
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1.1.1.1.1
From: Mark Pardi


Thanks

Dale

Yes I do hold a rea licence and corporation licence and auctioneers licence.

However our company continues to strive to break the "generic" rea "mould" or "stereo type"

By offering these services we do.....and taking the "professional" precautions and out sourcing that we do.

Dale,

What is your opinion of the last post regarding PIA and costs write offs.

Thanks

Mark
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1.1.1.1.2
From: Dale Gatherum-Goss


Hi Kristine

>Does this mean that the PIA
>software should not include a
>section for the writing off of
>establishment costs over the
>first five years?


No, I'm sorry if I was vague. The PIA software is right to write off the borrowing costs over 5 years. The distinction is between the costs of borrowing money to buy a property and the costs incurred in buying the property itself.


>Are there exemptions to this?
>Are some establishment costs
>allowable as costs, and the
>others as a cost to be
>capitalised?

I hope that the answer in the paragraph above helps to explain this situation better.


Does this help?

Dale
 
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Buyers advocate fees ? Inside or outside?

Reply: 1.1.1.2.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Mark

I'd like the opportunity to talk with you at some stage. I appreciate that you are attempting to make a distinction between ordinary real estate people and yourselves and I congratulate you on the effort. Good luck.

I hope that I have clarified the distinctions from Kristine's post enough for you.

Let me know if you would like more information though.

Dale
 
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