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Christmas comes but once a year, but so does a tax return, and this can also produce plenty of winter bounty, especially if tax minimisation rules are explored to their fullest extent. 
Reducing tax is in everyone’s interest, and there is no harm in treating it like a game of skill given the complex guidelines set by the ATO. However, like any game there will always be those who try and bend the rules, and the ATO will never tolerate cheats and nor should it. 
The complex nature of tax legislation and interacting with the ATO is often blamed as the root cause of problems encountered by people who play outside the rulebook. This is nonsense, and may I add by way of warning, where tax is the dominant purpose of any action then this is tax avoidance and the ATO would ignore any potential tax benefits and tax accordingly. 
As with any game of skill its knowledge and experience that wins the day, and as with other team sports it can pay to bring on other more experienced substitutes to improve your chances of winning in the shape and form of a tax expert. 
At this time of year there are many articles identifying tax tips, but these do not normally identify some of the smarter, less known strategies. 
Chan &amp; Naylor has compiled a non-exhaustive “smart list” of ATO-approved winning formulas not always considered in strategies relating to property investment tax reduction. 
<ul>
<li>You can claim interest expenses on any borrowing used to purchase investments. The purpose of the loan determines deductibility not what asset was used by the bank as security. For example if the home is used as security to buy an investment then interest is deductible. </li>
</ul>
<ul>
<li>The proper use of trusts (such as Chan &amp; Naylor’s Property Investor Trust ®) can legally allow negative gearing at marginal tax rates while allowing additional benefits of estate planning and asset protection. </li>
</ul>
<ul>
<li>Depreciation on the building and fixtures and fittings is an easy one, but many investors do not claim depreciation or use an inappropriate schedule that underestimates the depreciation claim. The rule of thumb here is not to underestimate what can be depreciated. Even old properties can have a reasonable deduction so use a specialist quantity surveyor to prepare the schedule. </li>
</ul>
<ul>
<li>When conducting renovations a quantity surveyor should prepare a scrapping or demolition schedule to place a value on all items being thrown away or demolished for an immediate tax deduction and on completion of the renovation or construction a new depreciation schedule will be needed. </li>
</ul>
<ul>
<li>All costs for a holiday or personal use property (other than main residence) including interest expense, repairs and maintenance can be added to original costs when calculating capital gains in the event of a sale.</li>
</ul>
<ul>
<li>When selling an investment property you should include all possible associated costs such as conveyance to buy and sell, stamp duty (different in ACT where costs are immediately deductible), selling agent’s fees, buyer agent’s fees, costs associated with marketing the property (for example touch-up paint, temporary furniture etc.) and the balance of borrowing costs (which are amortised over five years). </li>
</ul>
<ul>
<li>If refinancing you can expense any balance of the original borrowing costs or exit fees. </li>
</ul>
<ul>
<li>Land tax costs are deductible. </li>
</ul>
<ul>
<li>Interest expense on borrowings to purchase land is deductible if the intention is to build an investment property on the land, even if construction has not yet commenced. </li>
</ul>
<ul>
<li>Remember to consider the timing of a sale. Tax is triggered at date of contract not settlement. </li>
</ul>
<ul>
<li>If an investment property is sold after 12 months then a 50% capital gains tax discount applies if the property was originally purchased with the intention to keep. </li>
</ul>
<ul>
<li>If an investment property is sold before 12 months then the gains are still a capital gains (but without the 50% discount), which can be used to offset any capital losses. </li>
</ul>
If you have sold a property used to operate your business you may be eligible for the 50% small businesses exemption (active asset) on top of the 50% CGT general discount. Yes, two 50% deductions.
Ken Raiss is a certified accountant and director of <a target="_self" href="https://www.chan-naylor.com.au/" title="Chan &amp; Naylor ">Chan &amp; Naylor</a> national accounting firm. Chan &amp; Naylor offers a free five-minute question-and-answer session on its website under the<a target="_blank" href="https://www.chan-naylor.com.au/ask-the-experts/"> "Ask the Experts" section.</a>
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12 tips for property investors to reduce their tax bill: Ken Raiss

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Since 2007 investors have been able to purchase property in super with debt, giving them the twin benefits of leverage and concessional tax rates. Another benefit of buying in super was that at age 60 no tax is payable on either rental income or capital gains. 
What has eluded the investor, however, was the ability to practically and efficiently add value by doing a renovation. There was confusion by both the profession and the ATO in what was possible and how it is funded. 
With a stroke of the pen the ATO has clarified and simplified these elusive questions.
With the release of SMSFR 2012/1 the ATO has defined three critical areas and clearly defined what constitutes a renovation. 
In summary the ATO has confirmed that a self-managed super fund (SMSF) can borrow money to fund a cosmetic renovation, e.g. kitchen, bathroom, flooring etc. If the renovation is structural, e.g. if it moves internal walls, then the funds must come from internal SMSF cash, not borrowings. 
More technically this ruling clarifies what is a:
<ol>
<li>Repair</li>
<li>Improvement</li>
<li>Change to the single acquirable asset (SAA) </li>
</ol>
Specifically:
<ol start="1">
<li>Cosmetic renovation is identified as a repair by the ATO and so can be funded with debt. For tax purposes a scrapping schedule and a depreciation schedule would be completed. These costs cannot be expensed, so the use of the word repair can be misleading, but ATO has chosen to define repair differently for superannuation purposes and for tax. </li>
<li>Improvement such as moving internal walls, the addition of a granny flat, second story, swimming pool etc which does not change what the SAA is (i.e., it is still a single dwelling) can be done with internal SMSF cash but not debt. </li>
<li>A substantial improvement that alters the SAA to a point where what you end up with is not what you started with eg single dwelling into a duplex, land to land and dwelling, etc., cannot be done while there is a loan on the property/land. If there if no debt then it can be done but it must be funded by internal cash. </li>
</ol>
Note: properly documented and financed off the plan or a single contract that includes the land purchase and dwelling construction where in both cases a deposit is paid and then final payment is made on completion is OK. 
Unfortunately the ATO has also confirmed that an existing asset in super with no debt cannot have a loan facility created against it. 
Please note that you need to have your own SMSF to purchase property direct with debt as your retail/industry fund will not oblige.
Ken Raiss is a certified accountant and director of <a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" target="_self">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance. Chan &amp; Naylor offers a free five-minute question-and-answer session on its website under the<a href="https://www.chan-naylor.com.au/ask-the-experts/" target="_blank"> "Ask the Experts" section.</a>
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Changes to SMSF legislation will benefit property investors: Ken Raiss

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With the end of financial year fast approaching, we thought we would provide some general tax strategies for property investors to consider:
1. Documentation: Keep summaries of all your rental income and expenses.
This is much easier if you have your management agent looking after your property where they pay all expenses and collect all income. They will normally provide a monthly and annual statement.
Ensure you have all bank statements showing interest expense. The annual statement should show a summary of interest expense.
A specialist property accountant can assist by ensuring all allowable tax deductions are made. 
2. Depreciation: Only registered quantity surveyors are generally authorised to prepare depreciation schedules.
If you are contemplating a renovation a quantity surveyor can produce a scrapping schedule, which puts a value against all items to be thrown away. This value is expensed in the year of expenditure. The new items are then depreciated with a new depreciation schedule.
3. Travel: All your costs to inspect your investment property are tax deductible, including travel. Ensure you apportion any personal component.
4. Interest expenses: Only interest expenses on borrowed funds used to invest are deductible. It is the purpose of the loan that determines deductibility, not the security used to obtain the loan.
A split loan should be considered when a loan is used for both investment and private purposes.
If capitalising interest the Tax Office may require evidence of correct documentation and intention.
Interest deductibility should be easy but if not properly documented and managed this expense can cause frustration if the ATO decides to review and so the assistance of a specialty property accountant should be used.
5. Trusts: The use of a trust can be a major benefit to property investors by improving asset protection, estate planning and increasing flexibility. If using a trust ensure it has been correctly set up and operated to ensure you do not lose your interest deductibility, which is fully allowable by the ATO if you meet the requirements.
6. Pre-pay expenses: If you have a geared investment it is worth considering pre-paying next year's interest to gain an immediate tax deduction, especially if you're paying the flood levy this year. You can also get a deduction now by pre-paying next year's income protection insurance premiums. Also, consider bringing forward expenditure that would otherwise be spent after June 30. If you are planning on doing repairs on your property, note: Care should be taken in determining whether a maintenance or repair is deductible or if it is considered a renovation or of a capital nature.  Consider pre-paying other expenses such as rates, levies or possibly even interest (in the right circumstances).
7. Manage capital gains: Capital gains generated during the year can be minimised by offsetting it against capital losses or trading losses incurred during the same year. To reduce capital gain generated on sale of property or other assets during the year consider selling any assets which have lost value and their future is bleak. The 50% discount on capital gains is available where an asset is held for longer than 12 months. As this is a considerable saving consider the timing of any sale. The relevant date for calculating capital gains is the contract date, not the settlement date.
8. Manage capital losses: Capital losses incurred in any year are available to be carried forward to future years if there are insufficient gains to absorb it in the same year. It can be carried forward for an indefinite period. Capital losses cannot be offset against other income such as business trading income if you've made a capital gain this year, review your portfolio to see whether it is worth realising a capital loss to offset the gain. You can't carry losses back. So if you've made a capital gain, you may want to trigger a loss to offset it against.
9. PAYG variation: Where you have negatively geared rental investments, the negative part offsets against your other income, e.g. salary, reducing your tax payable and resulting in a large refund when your tax return is lodged. This refund can be used to reduce your loan, pay your interest expense or help finance another investment property. To help with cashflow, would it not be great if you were able to access this refund throughout the year instead of waiting till the end of the year? This can help finance that extra property, which has potential to pick up some capital growth between the beginning and end of year. This can be done by lodging an application to vary the income tax withholding using a form from ATO. This can be done electronically on line or you can download the form, prepare and lodge it manually. PAYG instalment obligations should be reviewed and consideration given to varying the instalment for the June 2012 quarter, where the estimate of income tax payable for the year is less than the instalments raised by the ATO. This will reduce the impact of this instalment on your cashflow.
Ken Raiss is a certified accountant and director of <a href="https://www.chan-naylor.com.au/" target="_self" title="Chan &amp; Naylor ">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance.
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Nine tax tips for property investors

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Planning your estate is an important matter. Estate planning involves arranging your assets and circumstances in such a way as to ensure that your beneficiaries after your death receive from your assets the maximum use and enjoyment at a minimum cost in taxes and heartache.
In other words, estate planning should be an efficient and effective intergenerational wealth transfer solution that provides for your required lifestyle and enjoyment ambitions while you are alive.
Before delving deeper into this topic with your legal adviser, it is important to understand the basic fundamentals. The main issue to understand is that your will only looks at your estate assets, which will be managed through your will, and not your non-estate assets, which are outside of your will.
It is also important to understand that the typical will leaves assets to specific people, e.g., spouse and children. The problems arising when the assets pass to that person directly is that it leaves them vulnerable to attack in bankruptcy situations, family law court hearings and the problem of minor’s tax.  This is where children under 18 are taxed at rates between 66% and 45% (plus Medicare levy) on unearned income. An estate plan ought to:
•    Ensure your estate assets pass onto intended people or organisations (charities, etc.) the   funds/assets in the amounts you intend; •    Minimise the impact of taxes; •    Ensure assets are not passed onto persons who are in bankruptcy or family disputes;
If you die without a will it is unlikely you will achieve your desired outcomes. The various states have different laws on how assets are to be distributed if you die without a will (intestate).
The most important issues to address in your will are:-
•    Ensuring that the interest of your spouse and children are protected; •    Minimising the effect of capital gains tax on the bequest; •    That there are safeguards in the will to ensure your assets are not lost to people outside of    the family.
There are many cases where the courts have overridden the wishes of the deceased. This can happen when a grieving child, spouse or other person feels they were mistreated in your will especially when they did not receive what they thought was due to them.  So you need to discuss this possibility with your lawyer when drafting your will to minimise the chances of any estate litigation.
1.    Estate assets These are primarily assets in your personal name and include: •    Property •    Shares •    Bank account •    Personal assets such as jewellery, car, furniture etc.
Assets owned together with someone else can either be as joint tenants or tenants in common. Under joint tenancy, the other person automatically takes full ownership upon your death. Tenants in common have your portion moving to your estate upon your death. 2.    Non-estate assets These are assets or rights not in your name. Typically these include;
•    Assets in a trust If you have a company trustee, the shares in the company may be in your name, and so these are passed on as estate assets in your will. The new shareholder would vote themselves in as directors, control the trust and as such the assets in the trust.
The trust would also typically have an appointer, being you. The position of appointer is a personal one and as such is not part of your estate assets. On death you can move this position to someone else via a memorandum of wishes.
•    Superannuation. These assets are not covered by your will whether in a self-managed super fund or a retail/industry fund. Typically people either via a binding death nomination request the superfund trustee to “give” the super to someone direct, or to the estate. If you send your super fund benefits to the estate, the will then takes over.
The super legislation prescribes who is eligible as a beneficiary, so it is critical to understand who is eligible, and how the dependency affects the tax treatment of funds received from your super.  These rules are the same irrespective of whether you “give” directly to someone or to your estate who then pays it out. 3.    Testamentary trusts The passing on of your estate assets can take on many forms. Traditionally people pass assets directly to the intended beneficiary i.e. title changes from the deceased to the beneficiary through a will. The will therefore does not take into account any unforeseen circumstances in the future such as:
1.    beneficiaries being bankrupt; 2.    beneficiaries going through family law proceedings; 3.    Minor children who will be taxed at minor’s penalty tax rates (66% dropping down to   45%).
The use of a testamentary trust is another way to pass on your wealth. A testamentary trust in essence passes on control, not the specific asset. Instead of passing assets directly to a beneficiary they are passed into a trust and a chosen beneficiary/s is put in control of the trust. This is not executed until your death, but forms part of your will. It is often an annexure to your will.
The problem is a will is normally prepared many years before death and as such there is no crystal ball to show what will happen in the future. In many cases people forget to update wills with changes. Even if immediately on your death all could be fine, but some time in the future things may change.
Testamentary trusts are usually a discretionary or fixed trust/s established as part of a will that takes effect following your death. It is important to also consider the use of a family lineage trust as the basis of your testamentary trust.  This ensures only direct family members gain access to benefits, thereby potentially guarding against an in-laws’ attack.
There is no standard format for a testamentary trust, they are adapted to suit the needs of a particular family. In many cases they include a lineage clause to ensure only your direct descendants can benefit from the income or capital. A will can include more than one testamentary trust and you can have sole or multiple beneficiaries in control. The bottom line is, who do you want your assets to go to and then set up the testamentary trust/s to mirror the decision. The only difference is that you pass control of assets to individuals not asset ownership.
4.    Insurance policies Life insurance can also be helpful in estate planning. It may help to cover a prospective CGT liability or allow the buyout of a partnership or allow the pay out of large debts on the estate. 5.    Other considerations Other items to consider is what happens in the tragic circumstances of you surviving an accident or medical problem only to be left in a coma or otherwise incapable of managing your affairs. Your will does not kick in until death. Other documents which you should have in place include:
1.    Enduring power of attorney 2.    Enduring medical power of attorney 3.    Guardianship instructions for your children
As is the case with your will, the above are state government driven, so state legislation applies.
Ken Raiss is a certified accountant and director of <a target="_self" href="https://www.chan-naylor.com.au/" title="Chan &amp; Naylor ">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance.
<a target="_blank" href="/news">Watch the webinar Ken recently presented on end-of-financial-year tax tips for property investors</a>
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Careful estate planning will make sure your assets, such as property, are transferred smoothly

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How can the astute property investor combine the benefits of low tax in super and the benefits of leverage? 
Superannuation’s prime responsibility is to provide a member with retirement income. With increasing regularity people are seeing their superannuation funds declining either from poor investments or spiralling costs. To get more control many people are moving to self-managed superannuation. 
Since mid-2007 self-managed superannuation funds have had the ability to invest in property, with bank debt.  Many see investing in property as less volatile, unlikely to reduce in value over time and importantly as an asset that is in limited supply and one that everyone needs. Thus market values (capital and rents) are more likely to grow over time. 
Property in a SMSF allows investors to accumulate property using bank debt that will be tax free in pension stage for both rental income and any capital gains on sale. At the same time, it allows the full benefits of negative gearing at the individual’s marginal tax rates while still working. This is like having multiple tax-free principal places of residences. Who says you can’t have your cake and eat it too? 
Many people argue that with leveraged property in a super fund there is less likelihood of an overall loss of superannuation, as the ability to borrow to increase the asset size allows more funds to be accumulated and grow in a less volatile asset class than maybe shares.
Ken Raiss is a certified accountant and director of <a target="_self" href="https://www.chan-naylor.com.au/" title="Chan &amp; Naylor ">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance.
 
 
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How to best use your self-managed super fund to invest in property

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The reason that many property investors get themselves into financial distress or do not maximise their returns on property investments is that they do not treat their property investment as a business. Three basic rules must be followed: 
Use an expert 
The number-one rule is to use experts in your team. 
Using a property expert to help you buy a superior property can effectivelly get you a “free” property. This is because a superior property growing at an average 10% annually over a cycle will double in value seven years earlier than a property growing at an average of, say, 5 %.

Working with an expert property accountant will advise you on all possible expenses to claim and help you determine whose name the property should be bought in. As an example, using superannuation can allow investors to buy property and claim negative gearing against their income that will later have zero tax on income or capital gains. 
It is surprising how many investors ignore or worse miss out on these opportunities. 
Manufacture equity 
The number two rule is: do not only rely on the market to give your market growth. Manufacture your own equity by buying a property that you can renovate. This will add both capital gains and rental benefits. 
Create a safety net 
The third rule is to create a safety net for the unexpected (interest rate increases, loss of tenant, major repairs, loss of job, etc.) so you do not have to rely on your wages to fund your property expenses. The safety net can come from access to equity to fund the unexpected. 
We call this a buffer, and it must be part of what your finance professional sets up for you.
Ken Raiss is a certified accountant and director of <a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" target="_self">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance.
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Three basic rules to maximise returns on property investment

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Like baking a soufflé, successful property investing requires three important elements: a well-proven recipe, good ingredients and technique. 
Successful property investors know only too well that shortcuts or lack of research are sure to cause financial distress. They also know that given the level of expertise and knowledge required to make the right decision it is essential that they have the best professionals on their team.
Well-proven recipe
Many property investors purchase with their heart. They buy in suburbs that they think they know with little regard for what tenants actually want. 
Successful property investing starts with purchasing the right property. A good capital growth property will pay for itself within 10 years. For those who like numbers, a property growing at a compound rate of 7% per year over a cycle will double in value in about 10 years. A poorer-performing capital growth of 5% will double in just less than 14.5 years while a superior 10% growth property will double in just over seven years. 
As an example, a $500,000 investment after 10 years will potentially grow in value to $814,447 (5% growth), $983,576 (7% growth) and $1,296,871 (10% growth). 
Good ingredients
Now that you have a good recipe, you should choose good ingredients. This involves identifying the correct name in which to purchase the property and ensuring cashflows are maximised by obtaining a depreciation schedule and scrapping schedule if embarking on a renovation. 
For many investors a trust could be a good vehicle to hold and grow wealth. The use of superannuation as a structure should also be considered, as this could mean you will pay no taxation on the investment property and potentially fund it without any additional cash resources. 
Understand the various land tax rules and finance options, as these can significantly sweeten the result. Like all good businesses you must not only grow your assets but protect them. Even if you already have property assets in your name, you can successfully protect them without moving to a trust and incurring CGT and stamp duty. 
Chan &amp; Naylor refer to the secret ingredient as a buffer. A buffer is accessible funds that can be used in emergencies including increased interest expenses, major repairs, a lost tenant, etc. 
A buffer should be measured in time and outline the span you need to make a safer investment. For example, if you say five years for a property that costs $10,000 per year to hold, then you need $50,000 in your buffer. If you choose to sell, a buffer means you do not have to accept the first offer and accommodates for highs and lows in the market. 
Technique
Property investment has a habit of throwing up the unknown, so you need to be prepared. To maximise your chance of a superior property you should take control of the outcome by manufacturing capital growth and not rely solely on market movements. 
Renovations will help turbo-boost your market value and also improve your rental yield, especially if completed soon after purchase. 
Preparation time
It is important that you choose a superior property for successful investment so don’t rush. To be sure, research varying properties in a range of areas and use all available resources including seeking assistance from a professional. 
And you have your soufflé! The main difference between following this property soufflé recipe and a Margaret Fulton recipe is that your property investing will not collapse when the unexpected happens. If you follow the three basic considerations, a lower return than expected is the worst you can expect, however with your buffer you can afford the time to see your property investment succeed. 
Bon appetit!
Ken Raiss is a certified accountant and director of <a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" target="_self">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance. The Chan &amp; Naylor team<a target="_blank" href="https://www.propertyupdate.com.au/2012-events/national-property-and-economic-market-update/"> will be at the upcoming Metropole workshop </a>to go through the above strategies and others in detail to help you successfully manage, grow and protect your property investments.
 
 
 
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Successful property investing is like baking a souffle

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This tax pearler is normally associated with the family home, but the federal government eliminated all taxation within superannuation when in the pension stage many years ago.  With the ability to now borrow in superannuation, the astute investor can now leverage his or her superannuation and borrow to purchase property that will become tax free.
While working and paying tax the investor can negatively gear a good capital growth property out of his or her pre-tax income in the same way as if it was purchased outside super. The 9% superannuation guarantee can even be used to fund the negative gearing. The big difference occurs after age 60 when the property in super will attract no tax on rental income or capital gains on sale. Payments from the super fund to the investor are also tax free, and in fact it does not even need to be itemised in the individual’s personal tax return. Outside of super the cashflows would be fully taxable on both the rental stream and any capital gains. This superannuation treatment allows the individual to effectively have the taxation benefits as if they had multiple family homes.
Many people are sceptical about investing in super and argue they are too young, the rules may change and it is too confusing. All valid concerns, but the primary aim of all investors is to make money, and this task is made easier if no taxes are paid. An investment property needs time to do “its thing”, i.e. capital growth, so even the younger generations can benefit. How good would it be to have some of your investments in the “pay no taxes” basket?
This strategy can in some instances apply even before age 60 and has the added benefits of creating an additional land tax threshold and improved asset protection. The benefits are many.
 Ken Raiss is a certified accountant and director of <a target="_self" href="https://www.chan-naylor.com.au/" title="Chan &amp; Naylor ">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance. 
 
 
 
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How to use your super to buy a tax-free investment property

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The following article goes through the issues an investor needs to understand when purchasing a property with debt within super.  It is important to appreciate that as a specific property is being purchased the investor must use a self-managed super fund (SMSF) and not their retail and or industry fund, as they need to have control to make this sort of specific investment. The SMSF should also have a company as trustee.
On September 24, 2007 the federal government introduced new legislation to allow superannuation funds to borrow under certain conditions.
The ATO issued additional guidelines on July 7, 2010 explaining what the borrowing arrangements apply to, including the definition of what constitutes an asset and how a loan structure needs to be set up and administered. There were a number of significant items in the July 7, 2010 guidelines, three being that (a) you had to hold the property outside of the SMSF in a holding trust with a company as trustee; (b) you could not do a renovation on a property “held” in the SMSF that was subject to a loan; and (c) you cannot replace an asset which has been destroyed, say by a natural disaster.
The July 2010 guidelines defined an asset to be a single acquirable asset (SAA). The interpretation of a SAA by the ATO significantly restricts what asset can be purchased and how it is managed. This guideline meant that a renovation (with cash or borrowed funds) was not allowable if the property was secured with debt, as the renovation changed the asset and as such, it was no longer the same asset that was originally purchased i.e., the property. This ATO position is in part the genesis of much of the industry concerns about the guidelines.
On September 14 2011 the ATO released additional draft guidelines in answer to industry concerns.  The new guidelines, among other things, now allow renovation if non-borrowed funds are used. This is a major improvement to the legislative interpretation for property investors. This means that the SMSF can do a renovation with cash resources within the fund.
The position on borrowings is now much clearer, but there are many areas that are not.  Any investors contemplating purchasing a property in super with debt needs to get specific advice, including whether the actual property being considered fits within the borrowing rules.
The super fund deed must also be reviewed to ensure it allows for borrowings, and the documentation needs to be carefully prepared so as to not inadvertently trigger double stamp duties and capital gains tax liabilities when the loan is paid off.
The borrowing must be limited recourse, which means that no other super fund asset can be used as security; the super fund member can go guarantor on the loan or give other non-super fund assets as security if required.
The SMSF can use debt to purchase any non-prohibited asset. The principle exclusion is a residential property off a member or associate of the SMSF member. The SMSF can however purchase business real property off a member.
The latest guidelines also clarify where debt can be used in relation to the property. Debt can obviously be used to acquire the property. Debt can also be used to do repairs, maintenance and to capitalise interest.
The property
Difficulties arise when looking at off-the-plan and house-and-land packages. It is allowable for the SMSF to use its cash resources to pay a deposit, and on completion of the construction borrow the remaining balance less any additional amounts from the SMSF to finalise the purchase. If land is purchased first (cash and or debt) with a second contract to build, the original asset being the land cannot be built on using debt.
Repairs and maintenance
If the property was originally acquired by the SMSF using a borrowing arrangement, additional borrowings are permitted for repairs and maintenance. However, if the property is not subject to a loan then new borrowings for repairs and maintenance are not permitted.
The draft ruling notes that an asset may be bought in a state in which a part of the asset is defective, damaged or suffering some deterioration of what would be considered to be its normal level of functional efficiency. Accordingly, the Tax Office says a restoration of that part of the asset to its functional efficiency would be a repair (and not an improvement) for limited recourse borrowing purposes.
Renovations
Investors looking at buying a "renovator's dream" need to be cautious, as the ATO states that a substantial renovation of a rundown property would improve the functional efficiency of the asset as well as substantially improving its value and therefore would amount to an improvement for which borrowings under the limited recourse borrowing rules would be prohibited.
While you cannot borrow to improve a single acquirable asset that is the subject of the limited recourse borrowing, the ATO in its latest ruling confirms its thinking that funds from within the SMSF can be used to improve the property. Caution is required in that the improvements cannot result in the property becoming a different asset. This will limit the type and size of any renovation
Please note that the September 14 guidelines are only in draft form, so investors will need to seek specific advice as to its use, and keep a watchful eye on any final ruling by the ATO.
Ken Raiss is a certified accountant and director of <a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" target="_self">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance. Ken will also presenting at <a href="https://www.chan-naylor.com.au/shop/event/buying-property-with-your-smsf/" target="_blank">The Echoice Buying Property with your SMSF Workshop in Sydney</a>. Ken and other experts will talk about how to substantially improve your superannuation.
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Issues an investor needs to understand when buying property in a SMSF

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Dear Ken,  I've leveraged a purchase in a NSW investment property, do you have any tips for me at tax time?
Hello there, and well done on your property investment. As well as a good long-term future investment, there are many ways of generating benefits now, and tax time as you indicate is an excellent opportunity to legitimately realise this. Here are some suggestions I hope you find both practical and perhaps enlightening.
<ul>
<li>From the outset you should be able to get an accurate depreciation schedule from quantity surveyor.</li>
<li>If you are contemplating a renovation then you should get a “scrapping schedule”, which both identifies and puts a value on what you throw away. This is then written off in the year of the renovation, plus you can also depreciate the new work thereafter.</li>
<li>Remember to add up all borrowing costs such as bank fees, valuation, stamp duty and so on, as you can write this off over five years.</li>
<li>To minimise your accounting fees get your real-estate agent to pay for everything other than interest, as he or she will give you a monthly and annual statement. You then only need keep bank statements.</li>
<li>Land tax is a fairly muddy area. If you bought your investment property through a special trust then there is no threshold. If, however, you bought it through a company or your name, then $387,000 is the official threshold before land tax is due. Land tax is applied at 1.6% on the land value (not property value) above your applicable threshold and then 2% if land is valued at above $2.366 million. You will receive a bill in around February for the year before and will need to pay for that year in full.</li>
<li>Try and save yourself time and stress by having all relevant documents ready for your accountant at tax time, including a copy of your contract of sale, loan documents, settlement sheet and all documents showing interest and other costs paid. If you are really organised then you could try and put this into a spreadsheet for your accountant, which is why using an agent to pay for everything other than interest helps.</li>
<li>If you did repairs immediately or shortly after the purchase then you many need to discuss this with your accountant as these may legally need to be capitalised (i.e. added to cost of the property) and not expensed.</li>
<li>Remember that you can only claim expenses including interest if the property was available for rent. A property that is not occupied by tenants for any period could be problematic, once more your accountant or a quantity surveyor should be able to help.</li>
<li>If the property loan is in a different name than yours on the contract of sale then you will need to fix this for tax purposes to ensure interest deductions are applicable. This can be compounded if funds from equity in another property is used. All of this can be fixed via a loan agreement, but you need to discuss this with your accountant to get it right.</li>
<li>Finally, if a trust was used to buy the property make sure all documentation is correctly drawn up to conform with ATO rules and requirements to allow you to claim interest deductions. Not all trusts are the same and not all allow tax deductions on expenses including interest expenses.</li>
</ul>
There is a lot to take in here, which is why some people make property investment a very successful career. My number-one recommendation is if there is any question of doubt in your mind, then you should seek professional advice.
I wish you luck.
Ken
Ken Raiss is a certified accountant and director of <a target="_self" href="https://www.chan-naylor.com.au/" title="Chan &amp; Naylor " style="outline-style: none; outline-width: initial; outline-color: initial; text-decoration: underline; color: #6888b1;">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance.
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What can landlords claim on tax?

An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.

The major mixed-use development would transform a prominent William Street site into a new residential village anchored by affordable housing and a large public park.

The proposal, submitted as a State Significant Development Application, covers 164-172 and 174-194 William Street, a 6,398 sqm site between Forbes Street and Dowling Street on the southern edge of Woolloomooloo.

Designed by fjcstudio in collaboration with Bangawarra, Studio Bright and Tribe Studio Architects, the scheme would deliver 227 apartments across four residential buildings ranging in height up to 18 storeys, alongside retail space, public domain improvements and a new publicly accessible park.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="0eb59b7c-914a-4a5c-b849-3a56749f5e93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.18.51%E2%80%AFAM.png?VersionId=mxM6EEqeoLjrCiTlCzTKTvzpKuh6kSkH" />

It's another design scheme for Rebel, who took <a href="https://www.apartments.com.au/news/nsw/first-look-rebel-property-group-takes-woolloomooloo-precinct-to-nsw-government">concept plans to the NSW Gov late last year</a>.

The latest plans will be a mix of 167 build-to-sell apartments and 60 affordable apartments, with the affordable housing component representing 15 per cent of the project's gross floor area. The apartment mix includes 12 one-bedroom, 53 two-bedroom, 89 three-bedroom apartments and 13 penthouses, while the affordable housing component would comprise 42 one-bedroom and 18 two-bedroom apartments.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="3b3d4553-8a8c-4af5-aa8c-519ffb1e28c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.12%E2%80%AFAM.png?VersionId=_Yb6ibN7eDnOtQjCNDK2eviORa4qzgv." />

Rebel Property is seeking to take advantage of the NSW Government's infill affordable housing bonus provisions under the Housing SEPP, which provide additional floor space and height in exchange for the delivery of affordable housing for a minimum of 15 years. The planning pathway allows a 30 per cent increase in floor space ratio and building height where 15 per cent of the development is dedicated to affordable housing.

&nbsp;

At the centre of the development is a 1,356 sqm sunlit public park designed to become a new community gathering space at the gateway to Woolloomooloo. The park would be complemented by a network of pedestrian laneways connecting William Street with the surrounding streets, improving permeability through what is currently a largely impermeable block.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="257af931-a393-4007-8c6d-7219796df58d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.51%E2%80%AFAM.png?VersionId=KAHy94GrhaReFsWTGDKfy39EDJ8gEEv4" />

The design team says the public domain has been heavily influenced by the site's topography and Aboriginal cultural heritage, drawing on the escarpments, gullies and landscape characteristics that historically defined the area before urbanisation. The landscape design has been developed in partnership with First Nations consultancy Bangawarra.

The project would be delivered across four separate buildings. The William Street East and William Street West buildings, designed by fjcstudio, would contain the majority of the apartments. Melbourne-based Studio Bright has designed the Forbes Street building, while Tribe Studio Architects is responsible for the Dowling Street building.

Rebel had secured approval for the concept plans late last year.

Joel Robinson

First look: HSN, Rebel, advances Woolloomooloo precinct plans

A locally heritage-listed furniture showroom on Water Street is set to become the centrepiece of a new mixed-use residential development as local developer&nbsp;<a href="https://www.apartments.com.au/developers/keylin-group">Keylin</a> seeks approval for <a href="https://www.apartments.com.au/new-apartments/lotus-on-water-street-290-water-street-fortitude-valley-qld-4006">Lotus on Water Street</a>, a 15-storey project on the Fortitude Valley side of Spring Hill.

The proposal spans 290 Water Street and 137-141 Warry Street, combining several properties into a 2,869 sqm site that sits between Fortitude Valley, Spring Hill and the rapidly evolving Victoria Park precinct. Keylin's plans would deliver 132 apartments alongside new retail, hospitality and commercial space, while retaining and repurposing the historic Brunswick Home Furnishers Showroom that fronts Water Street.

Designed by <a href="https://www.apartments.com.au/architects/jackson-teece">Jackson Teece</a>, Lotus on Water Street comprises a 12-storey residential tower rising above a three-storey podium and communal rooftop terrace. The development includes 76 apartments classified as multiple dwellings and a further 56 units proposed as short-term accommodation, designed to be flexibly used as either accommodation or permanent residences. The apartment mix comprises six one-bedroom, 54 two-bedroom and 16 three-bedroom homes.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="9822bb79-6c49-49c9-95ba-319e8c8d81c3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20front.png?VersionId=ioW8zbN4UVebbLetTFuv92t.HkdgfR5e" />

Residents would have access to an extensive rooftop recreation level spanning more than 1,200 sqm of communal open space. Plans include a pool, gym, sauna, infrared sauna, yoga area, library, private dining room, barbecue facilities and landscaped entertainment spaces, making the rooftop the project's largest shared amenity offering.

At street level, the proposal focuses on the adaptive reuse of the heritage buildings along Water Street, where 518 sqm of retail and commercial space is planned across shop, office and food and drink outlet uses. A permeable residential lobby would be positioned between the retained heritage buildings, creating a pedestrian connection between the historic streetscape and the new tower behind.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="269cf3e0-7d13-48bf-a318-05a00deb5c10" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20podium.png?VersionId=DLXmTCLsp6GOcLpQ0h.0z7wKCw59EhN_" />

The heritage retention strategy is central to the scheme. The development application notes that the Brunswick Home Furnishers Showroom and adjoining heritage buildings will remain, with only non-significant structures on the site earmarked for removal under a previously issued Heritage Exemption Certificate. Levels one and two of the new podium are recessed behind the heritage façades to maintain their prominence within the streetscape.

Jackson Teece has drawn inspiration from the site's manufacturing history when designing the podium. The planning documents state that the façade incorporates perforated metal screening that references the woven and rattan furniture historically produced on the site. Cascading and climbing plants are integrated throughout the podium to soften the building's presentation and screen parking levels behind. The landscape strategy also informs the project's name, Lotus on Water Street, drawing on the historic Spring Hollow waterholes that once ran through Spring Hill and the blue water lilies associated with Meeanjin, Brisbane's traditional name.

The proposal also incorporates the neighbouring property at 141 Warry Street, currently occupied by a healthcare service. The existing building would remain, with nine dedicated parking spaces allocated within the new development to support its ongoing operation. In total, Lotus on Water Street proposes 117 car spaces, including 110 resident spaces and seven visitor bays, alongside 100 bicycle spaces.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="70cf07bc-4fd8-4e70-92dd-be8b21c4e4f0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20site.png?VersionId=txlxrJImM0Sm_vTzHVKh5DDUkyL_CiiA" />

The site sits within the Spring Hill East Precinct of the Spring Hill Neighbourhood Plan and is positioned around 650 metres from both Fortitude Valley Station and Exhibition Station. It is also within walking distance of the King Street precinct, Royal Brisbane and Women's Hospital, Herston Quarter and Victoria Park, which is earmarked to become a major venue precinct ahead of the Brisbane 2032 Olympic and Paralympic Games.

Planning documents describe the location as a key gateway between Spring Hill and Fortitude Valley and highlight the area's increasing importance as new transport infrastructure and Olympic-related investment reshape Brisbane's inner north. The development team argues the project will contribute additional housing supply while activating a section of Water Street that has historically received less investment than other parts of the Valley.

Keylin has become increasingly active across Brisbane and southeast Queensland, assembling sites in strategic inner-city locations. They are currently selling and delivering <a href="https://www.apartments.com.au/new-apartments/oria-spring-hill-447-gregory-terrace-spring-hill-qld-4000">Oria Spring Hill</a>, just over 140 apartments due for completion in 2027.

Keylin plans heritage-led Lotus on Water Street apartment development in Fortitude Valley

Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.

The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.

One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.

"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.

"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."

[smartcode_project:default project_id=7395 project_image_fid=278196]

The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.

PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.

"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.

Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.

The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Juliet to sit quietly amid Roseville apartment boom

Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.

<a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.

The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.

“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.

LPS Group is expected to start construction later this year.

Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.

[smartcode_project_cta:default project_id=150017]

Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

Are mortgage holders set to get a reprieve from the RBA in 2026?

Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Ken Raiss

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