{"id":6181,"date":"2015-10-23T11:36:31","date_gmt":"2015-10-23T00:36:31","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6181"},"modified":"2015-10-23T11:36:31","modified_gmt":"2015-10-23T00:36:31","slug":"savvy-super-saving-with-smsfs-property-and-depreciation","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/savvy-super-saving-with-smsfs-property-and-depreciation\/","title":{"rendered":"Savvy super saving with SMSFs, property and depreciation"},"content":{"rendered":"<p>With the costs of living expenses rising, saving enough money for future retirement has become more essential now than ever before.<br \/>\nA recent estimate from the Association of Superannuation Funds of Australia (ASFA) suggests that the average Australian couple will need a super balance at retirement of $640,000 and singles will need a super balance at retirement of $545,000. This is an increase of $130,000 and $115,000 respectively from previous ASFA estimates.<br \/>\nDue to the importance placed on their retirement savings, many Australians have elected to place their superannuation into Self Managed Super Funds (SMSFs). Recent statistics from the Australian Taxation Office (ATO) estimate that 1,044,004 Australians were members of 550,706 SMSFs established as of March 2015.<br \/>\nBased on these figures, it seems that many find the additional controls they will gain by placing their money into a SMSF rather than an industry super fund appealing.<br \/>\nDespite the drawcard of having more control over your retirement savings, there are a number of pitfalls that both existing and potential SMSF members should be aware of.<br \/>\nWhile trustees of SMSFs can choose to invest in almost any investment product, they must do so within restrictions set by the ATO and the Superannuation Industry Supervision (SIS) Act.<br \/>\nBecause Australian\u2019s have an affinity for all things bricks and mortar, another drawcard that may be encouraging many to become SMSF members is the ability for their fund to invest in property. In September 2007 amendments were inserted into the SIS Act 1993 that enabled the trustees of a SMSF to set up a structure allowing them to borrow money to invest in real estate.<br \/>\nThe value of residential property investment through SMSFs in March 2015 now sits at $21.78 billion, an 11 per cent increase on figures recorded by the Australian Securities and investment Commission in March 2014.<br \/>\nWhen it comes to the property transactions made by SMSFs, trustees must be extremely careful to maintain a distance. Members of a SMSF can\u2019t use a residential property personally, nor can they lease the property to family members. Commercial properties on the other hand may be rented by a trustee\u2019s business provided that the corporation pays what is seen to be a fair market value rent.<br \/>\nAnother area trustees of SMSFs must be careful of if their fund invests in real estate is the tax implications this will have.<br \/>\nAs with any other property investment, SMSF trustees who invest in real estate are entitled to a capital works deduction for the wear and tear on a building\u2019s structure and also for the depreciation of all plant and equipment items contained inside and outside the property.<br \/>\nTo examine how depreciation deductions can make a difference to a SMSFs tax liability, let\u2019s take a look at an example scenario with and without depreciation.<br \/>\nAn SMSF owns a three bedroom apartment purchased for $884,500 with a rental income of $750 per week, resulting in a total income of $39,000 per annum.<br \/>\nExpenses for the property such as interest rates, management fees and holding costs totalled $50,845. Therefore the SMSF has a tax deductible loss for this residential property of $11,845 prior to lodging their tax assessment. The tables below show the difference claiming depreciation will make for this property owned by a SMSF.<br \/>\n<img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6177\" alt=\"table\" src=\"https:\/\/i0.wp.com\/realestatetalk.com.au.s3.amazonaws.com\/wp-content\/uploads\/2015\/10\/2015_TA401_scenarios_with-and-without-depreciation.jpg?resize=600%2C701\" width=\"600\" height=\"701\" \/><br \/>\nWithout claiming depreciation, the SMSF is only able to claim $11,845 and reduce the fund\u2019s tax liability by just $1,189, resulting in a negative cash position of -$193 per week.<br \/>\nA depreciation deduction of around $15,800 could be expected for a typical three bedroom apartment in the first full financial year. By claiming $15,800 in depreciation, the total deductible loss is increased to $27,645. By claiming 15 per cent on the total deductible loss of $27,645, the SMSFs tax liability will be reduced by $4,147, thereby adding $2,370 to the retirement fund in the first year.<br \/>\nIt is important that SMSF trustees always take advantage of the additional funds available via a depreciation claim. SMSF trustees who are considering investing in properties are encouraged to seek the advice of an Accountant and to consult with a specialist Quantity Surveyor such as <a href=\"http:\/\/www.bmtqs.com.au\/?utm_source=real-estate-talk&amp;utm_medium=article-oct-2015&amp;utm_term=homepage&amp;utm_content=savvy-super-saving-with-smsfs-property-and-depreciation&amp;utm_campaign=real-estate-talk\">BMT Tax Depreciation<\/a> to find out how much depreciation can be applied to an SMSF investment property.<br \/>\n<b>Article provided by BMT Tax Depreciation. <\/b><b><br \/>\n<\/b><b>Bradley Beer<\/b><b> (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT <\/b><b>Tax Depreciation.<br \/>\nPlease contact 1300 728 726 or visit\u00a0<a title=\"http:\/\/www.bmtqs.com.au\/\" href=\"http:\/\/www.bmtqs.com.au\/?utm_source=real-estate-talk&amp;utm_medium=article-oct-2015&amp;utm_term=homepage&amp;utm_content=savvy-super-saving-with-smsfs-property-and-depreciation&amp;utm_campaign=real-estate-talk\">www.bmtqs.com.au<\/a> for an Australia wide service.<\/b><br \/>\n&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the costs of living expenses rising, saving enough money for future retirement has become more essential now than ever before. A recent estimate from the Association of Superannuation Funds of Australia (ASFA) suggests that the average Australian couple will need a super balance at&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":6180,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[5,25],"tags":[],"class_list":["post-6181","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bmt","category-sponsored-channels"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Savvy super saving with SMSFs, property and depreciation - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/savvy-super-saving-with-smsfs-property-and-depreciation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Savvy super saving with SMSFs, property and depreciation - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"With the costs of living expenses rising, saving enough money for future retirement has become more essential now than ever before. A recent estimate from the Association of Superannuation Funds of Australia (ASFA) suggests that the average Australian couple will need a super balance at...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/savvy-super-saving-with-smsfs-property-and-depreciation\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2015-10-23T00:36:31+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"Savvy super saving with SMSFs, property and depreciation\",\"datePublished\":\"2015-10-23T00:36:31+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/\"},\"wordCount\":724,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"articleSection\":[\"BMT\",\"Sponsored Channels\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/\",\"name\":\"Savvy super saving with SMSFs, property and depreciation - Realty Talk\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"datePublished\":\"2015-10-23T00:36:31+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#primaryimage\",\"url\":\"\",\"contentUrl\":\"\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/savvy-super-saving-with-smsfs-property-and-depreciation\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Savvy super saving with SMSFs, property and depreciation\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\",\"name\":\"Realty Talk\",\"description\":\"Your Trusted Voice For Property Investing. 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