SMSF Trustees investing in real estate are entitled to claim depreciation on Capital Works and Plant and Equipment similarly to investment properties held under an individual or joint ownership structure.
When optimising the return of your SMSF, investors must consider all tax benefits available as the advantage in cash flow can compound significantly prior to the release of super funds. It is crucial to prepare a tax depreciation schedule which is designed to last the lifetime of the property so the trustees can take advantage of additional funds/cash flow benefits.
- Depreciation is the wear and tear of the buildings structure and any associated assets within and is typically the second largest tax deduction after interest.
- An investment property can claim the wear and tear for 40 years from building completion.
- The ATO cut-off for depreciation is for residential properties built after 15 September 1987 and/or renovated after 27 February 1992.
- For commercial properties, the cut-off date is for building built after 20 July 1982.
- Duo Tax Quantity Surveyors able to estimate the initial construction cost and value of fixtures and fittings for the SMSF trustee in order to claim depreciation.
- SMSF’s are eligible to receive tax benefits at the rate of 15%
- On average, SMSF Investors save $7,500 a year in depreciation.
This is not tax advice but general information and requires the assistance of a SMSF expert. Speak to your SMSF advisor for the most suitable advice as each scenario is unique. Duo Tax Quantity Surveyors can project the estimated yearly claim of your property for the SMSF trustee or advisor to make an informed decision on achieving the highest return possible.