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SMSFs still missing out on property tax break

Katarina Taurian
18 March 2016 — 1 minute read

ATO figures suggest property investors are failing to claim their depreciation correctly, resulting in thousands of dollars in unclaimed tax entitlements.

Recent figures from the ATO indicate 2.8 million property investors claimed deductions relating to their rental property in the 2012/2013 income year.

Analysis of these figures by BMT Tax Depreciation suggests that property investors, which chief executive Bradley Beer is confident includes SMSF property investors, are missing out on significant tax deductions


“Of these investors, just over one million received an average capital works deduction of $2,113 while almost two million investors claimed an average deduction of $1,179 for depreciation of plant and equipment, making the total average depreciation claim made by property investors who claim both in the 2012-2013 income year $3,292,” BMT stated.

“When compared with statistics released by the ATO for the 2011-2012 income year, there was an increase of almost 100,000 in the total number of investors claiming deductions for their rental properties.

“Despite this, there was very little change in the average deductions claimed for capital works or plant and equipment assets.”

Speaking to SMSF Adviser, Mr Beer said although SMSF trustees are typically “a little more” sophisticated than an average property investor, they’re often not entirely across the depreciation benefits they can claim.

Further, he expressed concern about the change in the knowledge levels of SMSF investors over time.

“Since the borrowing rules over the last number of years have been relaxed around property for SMSFs, even though they’ve tightened them up again now, people were probably putting properties into SMSFs [who shouldn’t]” Mr Beer said.

“They’re probably less sophisticated than what they were in the past but possibly a little more sophisticated than the general investor into property,” he said.

Read more: 

Aussie small caps proving valuable for SMSFs

Poor client documentation hurting sale price of practices

Govt urged to review pension asset test changes

SMSFs still missing out on property tax break
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