This month we look at depreciation inside a Super Fund…
Every day I receive an email along the lines of “Buy property in your super fund”.
So should you?
Generally, it can be a pretty good strategy – in fact, I recently bought Washington Brown’s head office in my super fund.
BUT, there are still things you need to remember:
While the income (rent) you receive will only be taxed at the maximum rate of 15% …
any depreciation benefit you receive will also only have a maximum benefit of 15%.
Put simply, there are two scenarios:
1. Property in Super Fund name: Washington Brown Depreciation report calculates depreciation Year 1 at $10,000.
Max Tax Benefit to you is $10,000 x 15% = $1,500
2. Property in Personal name: Washington Brown Depreciation report calculates depreciation Year 1 at $10,000.
Max Tax Benefit to you is $10,000 x 45% = $4,500 (Max Tax Rate 45%)
(If you’re on the highest marginal tax rate).
So one way to get the maximum benefit out of buying property in your super fund is to buy property where the rent is relatively high. As the income in the fund is only taxed at 15%.
It’s still worthwhile getting a depreciation report for your super fund – but it has less benefit compared to a property in your own name.
Tyron Hyde is director of Washington Brown and has over 15 years experience in the construction and development industry. Considered one of Australia’s leading experts in property tax depreciation, Tyron regularly presents at industry conferences and events and has published numerous articles on tax depreciation and property investment.
Tyron has a Bachelor in Construction Economics from University of Technology Sydney.
Click here to read more tips from Tyron!
Do you have more than $200k in your super fund? You could use your super to buy property - Find out how
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