Today I tell you about the time I got called incompetent (with good reason) by a buyer client, following the issuance of the real estate agency's commission invoice.
It was December 2016, when following the signing of a preliminary purchase and sale agreement, I issued an invoice for the amount agreed upon with the parties for brokerage fees.
The buyers-a married couple-after paying what they owed, returned home to await the final deed, which was to take place six months from now.
In May 2017, tax return period, the wife of the client whose invoice I had made out to called me angrily, railing against me because she could not deduct her share of the commission because only one invoice had been issued under her husband's tax code.
Mortified about the incident, consulting with our tax lawyer, I remedy by issuing a credit note cancelling the previous invoice and redo the invoices in 2017 this time for 50% of the amount in the name of the 2 spouses, so that in the 2018 tax return they can each deduct their share.
To avoid repeating my mistake,
Let's see in detail how and how much can be deducted of the real estate agency's commission:
Under the current regulatory framework,
" fees paid to real estate brokers for the purchase of a property to be used as a main residence are deductible to the extent of 19%, on a maximum amount of 1000 € "
This means that of the commission paid ( obviously with a traceable invoice ) above 1000 € you can deduct 190 €
What are the requirements for deducting real estate agency commission?
- First, the purchase of the property must be completed. A registered preliminary purchase and sale agreement, as well as the final deed, is fine with the IRS.
- The dwelling purchased must be the principal dwelling ( not the 1st house, they are 2 different things although they may coincide ) by principal dwelling we mean the dwelling where the taxpayer or his/her family members habitually reside.
- There is a time limit within which the house must become a habitual dwelling, which is the one stipulated in letter B of Article 15 of the TUIR ( Income Tax Consolidation Act ) which is the same as the one you find to maintain the first house benefits ( 12 months ) except in special cases or exceptions.
Basically if the property is purchased by more than one person, who will hold the property in their name and pay the commission, the advice I give is to request the pro-rata invoice of the commission to be paid, so that each individual taxpayer can make the deduction as intended!!!
( so you avoid all the words that I took 😉 )
OK,OK... now you know how to discharge the commission of a real estate agency....
BUT DO YOU KNOW WHY IT NEEDS TO BE PAID AND WHAT IS THE RIGHT AMOUNT? ==> Find out in this article
