Tax deductions for SMSF investment property

[tvc889]

I am new to SMSF. I've read somewhere that we can also claim depreciation for SMSF investment property so this could reduce the SMSF tax considerably. I just wonder if anyone can confirm if this is ture? How about the rental expenses? Can we get tax deductions for rental expenses as what we can for normal investment properties?

Thanks,

Patrick

 

[tvc889]

Anyone can help? Or the questions are too simple that no one bothers to answer?

Thanks,

Pat

 

[Peter_Tersteeg]

You probably haven't had any answers yet because it's too early in the morning. Some answers take longer than 45 minutes ...

... but here it is ...

Any tax deductions on assests held within any sort of super fund are quarantined to within that fund. Whilst the property within a SMSF may have depreciation, you can't claim it against your income, only against income earned within the fund.

Given that super funds don't pay a lot of tax, there's not going to be much in the way of tax deductions.

Don't make investment decisions within super funds based on tax deductions, it's unlikely have any benefit.

Keep in mind that any volantary super contributions to make from your personal income into the super fund do have additional tax deductions, but this doesn't have any relevance to the assets held within the fund.

 

[coastymike]

Post a thread on a free forum asking for free advice and expect it to be answered in under 24 hours ?

To answer your question I can't be bothered.

 

[tvc889]

Answering it or not is your choice and I didn't force you to do so.

Post a thread on a free forum asking for free advice and expect it to be answered in under 24 hours ?

To answer your question I can't be bothered.

 

[tvc889]

Many thanks for the reply. That's very helpful.

Cheers,

Pat

You probably haven't had any answers yet because it's too early in the morning. Some answers take longer than 45 minutes ...

... but here it is ...

Any tax deductions on assests held within any sort of super fund are quarantined to within that fund. Whilst the property within a SMSF may have depreciation, you can't claim it against your income, only against income earned within the fund.

Given that super funds don't pay a lot of tax, there's not going to be much in the way of tax deductions.

Don't make investment decisions within super funds based on tax deductions, it's unlikely have any benefit.

Keep in mind that any volantary super contributions to make from your personal income into the super fund do have additional tax deductions, but this doesn't have any relevance to the assets held within the fund.

 

[MikeF]

SMSF Property Deductible Expenses

I am new to SMSF. I've read somewhere that we can also claim depreciation for SMSF investment property so this could reduce the SMSF tax considerably. I just wonder if anyone can confirm if this is ture? How about the rental expenses? Can we get tax deductions for rental expenses as what we can for normal investment properties?

Thanks,

Patrick

SMSF property expenses are deductible same as a normal investment property and may include;

Accounting
Advertising
Bank Charges
Body Corporate fees
Cleaning Costs
Council Rates
Depreciation
Electricity/Gas
Lawn mowing
Insurance
Interest on loans
Land Tax
Legal expenses
Pest Control
Property Agent Fees

 

[tvc889]

Hi Mike,

Thank you for the reply. Are they deductible towards any income generated by the SMSF or the rental income from that property only? Does negative gearing apply for SMSF property?

Cheers,

Pat

SMSF property expenses are deductible same as a normal investment property and may include;

Accounting
Advertising
Bank Charges
Body Corporate fees
Cleaning Costs
Council Rates
Depreciation
Electricity/Gas
Lawn mowing
Insurance
Interest on loans
Land Tax
Legal expenses
Pest Control
Property Agent Fees

 

[MikeF]

Pat

My understanding is...............

All deductible property expenses get effectively get netted out against all other SMSF normal income other than capital gains but you should speak with a qualified SMSF accountant to get the fine detail.

 

[tvc889]

Hi Mike,

Thank you again.

It seems that negative gearing does not fit into the SMSF IP scenario very well.

Cheers,

Pat

Pat

My understanding is...............

All deductible property expenses get effectively get netted out against all other SMSF normal income other than capital gains but you should speak with a qualified SMSF accountant to get the fine detail.

 

[MikeF]

SMSF Property Purchase Calculator

I recently came across the following SMSF property purchase calculator.

http://www.netactuary.com.au/Calculators/Property/Property.aspx?ID=thesmsfacademy

According to the website this calculator can be used to investigate whether it would be more beneficial to hold an investment property in a SMSF or directly.

I have not used it yet but it looks pretty good and may be helpful.

 

[tvc889]

Hi Mike,

Will check it out. Thanks! You are a great helper.

Cheers,

Patrick

I recently came across the following SMSF property purchase calculator.

http://www.netactuary.com.au/Calculators/Property/Property.aspx?ID=thesmsfacademy

According to the website this calculator can be used to investigate whether it would be more beneficial to hold an investment property in a SMSF or directly.

I have not used it yet but it looks pretty good and may be helpful.

 

[bene313]

All deductible property expenses get effectively get netted out against all other SMSF normal income other than capital gains but you should speak with a qualified SMSF accountant to get the fine detail.

Actually, ordinary expenses are deductible against capital gains as well as other income of the fund. It's capital losses which are quarantined and not deductible against ordinary income.

 

[tvc889]

Does this mean that you could use the rental expenses to offset your capital gains from shares?

Thanks,

Pat

Actually, ordinary expenses are deductible against capital gains as well as other income of the fund. It's capital losses which are quarantined and not deductible against ordinary income.

 

[Peter_Tersteeg]

You could offset share trading losses, as long as those losses are held within the same super trust.

 

[tvc889]

Thanks.

For example, the rental expenses + interest is $30,000 per year while the rental income is only $25,000 per year, does this mean I can use the $5,000 loss to offset the shares capital gain in that year? In addition, the depreciation is $4,000, can I get tax credit for that $4,000 as well? So if the capital gain from shares is $9,000 in total, does that mean I don't have to pay any tax for this $9,000 as I have a loss of $5,000 & a depreciation of $4,000 from the property?

Cheers,

Pat

You could offset share trading losses, as long as those losses are held within the same super trust.

 

[Peter_Tersteeg]

If the shares are held within the same trust as the property, you can use your property lossess to offset the profits from the shares. Your accountant will figure out specifically how it applies to the circumstances of your fund.

 

[bene313]

For example, the rental expenses + interest is $30,000 per year while the rental income is only $25,000 per year, does this mean I can use the $5,000 loss to offset the shares capital gain in that year? In addition, the depreciation is $4,000, can I get tax credit for that $4,000 as well? So if the capital gain from shares is $9,000 in total, does that mean I don't have to pay any tax for this $9,000 as I have a loss of $5,000 & a depreciation of $4,000 from the property?

Correct. But it wont work the other way where you make a capital loss and wish to offset it against rental/interest/dividend income.

 

[tvc889]

Many thanks!

Pat

If the shares are held within the same trust as the property, you can use your property lossess to offset the profits from the shares. Your accountant will figure out specifically how it applies to the circumstances of your fund.

 

[tvc889]

Many thanks for the extra information.

Pat

Correct. But it wont work the other way where you make a capital loss and wish to offset it against rental/interest/dividend income.