Buying Advice
Are Buyers Agent Fees Tax Deductible?
The short answer depends on what you're buying. Here's a plain-English explanation of when buyers agent fees are tax deductible in Australia and when they're not.
The short answer: it depends on what you're buying the property for.
If it's going to be your home, no. If it's an investment property, generally yes, but not in the way most people expect. It's not an immediate deduction. It gets added to your cost base and reduces your capital gains tax when you eventually sell.
Here's how it works.
Investment Properties
Buyers agent fees for investment properties are generally treated as a capital cost, which means they're added to the cost base of the property for CGT purposes. When you sell, a higher cost base means a lower capital gain, which means less tax.
Example: You buy an investment property for $700,000 and pay a buyers agent $12,000. You can't claim that $12,000 as a deduction in the year you pay it. But when you sell the property, that $12,000 is added to your cost base, reducing the capital gain you're assessed on.
Some portions of the fee related to ongoing advice or property management may be deductible in the year they're incurred. Talk to your accountant about how to split this if it's relevant to your situation.
Your Home (Principal Place of Residence)
If you're buying a home to live in, the buyers agent fee is not tax deductible. No income is being generated, so the ATO doesn't allow a deduction. It's treated the same as stamp duty or legal fees.
What Is Immediately Tax Deductible on an Investment Property?
These ongoing expenses are generally deductible each year:
- Property management fees
- Advertising for tenants
- Repairs and maintenance
- Council rates and land tax
- Strata or body corporate fees
- Loan interest on the investment mortgage
- Depreciation on fixtures and fittings
- Landlord and building insurance
Upfront acquisition costs like buyers agent fees, stamp duty, and conveyancing fees are not immediately deductible. They go into the cost base instead.
What Do Buyers Agents Charge?
Fees vary depending on the agent, the market, and the level of service. The two most common structures are:
- Flat fee: Usually $7,000 to $25,000 depending on the property value and market
- Percentage of purchase price: Typically 1.5% to 3%. On an $800,000 property at 2%, that's $16,000.
Some agents also charge an upfront retainer of $1,000 to $3,000, with the balance due on purchase. Always confirm the full fee structure before you engage anyone.
Is It Worth It?
For investors especially, the maths can work in your favour. If a buyers agent negotiates a better purchase price and their fee reduces your CGT on sale, the net cost can be significantly less than the headline number suggests.
That said, it's not a guaranteed win. The quality of buyers agents varies a lot. A good one pays for themselves. A poor one doesn't.
Read our full guide on whether buyers agents are worth it
One Important Note
This article is general information only. It's not tax advice. Everyone's situation is different, and the ATO's rules can change. Talk to a qualified accountant before making decisions based on deductibility.