Preliminary data by research giant Charter Keck Cramer reveals a 54 per cent decline in Build to Sell apartments across Australia's capital cities, while the Build to Rent boom continues with a 378 per cent increase over the last five years.

Charter Keck Cramer's upcoming National State of the Market Report - Key Metropolitan Areas, scheduled for release in September, will reveal&nbsp;a dramatic transformation in apartment supply patterns across Australia's capital cities between FY2016-2020 and FY2021-2025.

The Build to Sell (BTS) apartment sector has experienced a substantial contraction, with total supply falling by 54 per cent compared to the previous five-year period. The decline represents a reduction of 149,200 apartments across all capital cities.

<img alt="BTS Charter Keck Cramer" data-entity-type="file" data-entity-uuid="3db2ddf3-e7c0-481f-b8b9-63efb365cb80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-08-20%20at%2011.26.34%E2%80%AFAM.png?VersionId=bsQl8inhZA7FeiPamnGvw1tse0obBdSd" />

Sydney led the downturn with a decrease of 73,600 apartments, followed by Melbourne (-42,800) and Brisbane (-26,800). Perth and Adelaide also recorded significant declines of 6,400 and 2,400 apartments respectively. Only Gold Coast and Canberra bucked the trend, with modest increases of 500 and 2,300 apartments.

In stark contrast, the Build to Rent (BTR) sector has emerged as a major force in the apartment market, recording a remarkable 378% increase in supply. This growth added 8,590 apartments across the capital cities during FY2021-2025. Melbourne dominated BTR growth with 6,160 additional apartments, while Sydney contributed 2,100 units. Brisbane and Canberra also recorded growth of 800 and 330 apartments respectively. Gold Coast and Perth recorded minor declines, while Adelaide maintained steady levels.

<img alt="BTR CKC" data-entity-type="file" data-entity-uuid="ca13ffd4-ab93-4828-afd2-4c3dccbd2b51" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-08-20%20at%2011.28.54%E2%80%AFAM.png?VersionId=SXNnpcJuFD36ViWOwF6izBBqcQc3NWao" />

“These preliminary findings indicate a fundamental shift in Australia's apartment development landscape, with traditional Build to Sell models giving way to institutional Build to Rent developments,” said Richard Temlett, Charter Keck Cramer’s National Executive Director of Research.

"This transition reflects changing investor preferences, regulatory environments and housing affordability challenges across major metropolitan areas.”

The complete Charter Keck Cramer National State of the Market Report – Key Metropolitan Areas will provide comprehensive analysis of these trends, their underlying drivers and implications for developers, investors and policymakers when released in September.

Joel Robinson

Build to Sell apartment supply drops 54% in five years across Australian capital cities

Verso Development Group is seeking to bring over 1,100 apartments to the heart of Brisbane's Toowong, with plans filed for a $1 billion, triple tower development known as Toowong Central.

The landmark urban regeneration project "aims to reshape the core of Brisbane’s inner-west riverside suburb."

Covering over 1.4-hectares across&nbsp;Sherwood Road, High Street, and Jephson Street, Toowong Central has been designed by KHA and will comprise three towers rising 49, 55, and 58 levels.

<img alt="Toowong Central" data-entity-type="file" data-entity-uuid="48611e3d-7123-4b99-b2cb-bfa4bc98024f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenities.png?VersionId=yKBexB.BgCkq4OET8fHDkWs0d3DjxOKJ" />

According to the Urban Context Report prepared by Urbis, Toowong Central is positioned as a “city-defining precinct reclaiming Toowong as ‘the best destination in the west’,” with a vision to deliver density differently, strengthen Toowong’s identity, and lead subtropical urban design.

There will be a wide range of apartment configurations, from one-bedrooms to five-bedroom penthouses, as well as short-term accomodation offerings. The design prioritises pedestrian permeability, with an activated public realm featuring a central civic plaza, laneways, and street-level retail and dining.

“The central square’s structure, programming, scale and location creates a social anchor - shaped by its edges, flexible for use, and animated by a diversity of experiences throughout the day and into the evening,” the Urban Context Report noted, reinforcing the project's ambition to become a vibrant community destination.

Design excellence was pursued through an international design competition, attracting entries from renowned practices such as UNStudio and BIG. KHA’s winning design distinguished itself with a ceremonial approach to the public realm, integrating terraces, tiered seating, and green infrastructure to promote social interaction and resilience.

The development builds upon two existing approvals: the 25- and 20-storey towers of the Aviary Toowong proposal, and a separate 25- and 24-storey approval at 88 Jephson Street. Consolidation of these fragmented landholdings under a precinct-wide approach allows for increased community value and cohesive urban integration.

Urbis Director Nicholas Stevenson said Toowong Central will bridge the gap in Toowong's current experience, unlocking the potential of the wider precinct.

"Overcoming experiential constraints and leveraging contextual advantages – Toowong Central will redefine Brisbane's inner west.”

<img alt="Toowong Central" data-entity-type="file" data-entity-uuid="73f7a702-625d-452d-9df2-30a0863ac1e8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/master.png?VersionId=TZdh6wxGC_8IIroXpdkZfuhlS8mFZnea" />

Toowong Central’s ambition extends beyond residential and commercial outcomes. Uses under consideration include a world-class hotel, university facilities, a museum, and health and wellness services, reflecting its role as a western gateway to Brisbane’s growing innovation corridor between the CBD and the University of Queensland.

Urbis Managing Partner James Tuma said Brisbane has no greater opportunity to showcase the future of urban living than Toowong – a sustainable, economically vibrant, and people-centric place that embodies the best of Brisbane.

[The plans] gives us a glimpse into our future as a globally relevant, youthful, entrepreneurial, and distinctly subtropical city.”

$1 billion Toowong Central to deliver 1,100 apartments to undersupplied Brisbane market

In <a href="https://www.apartments.com.au/developments/runaway-bay-qld-4216">Runaway Bay</a>, new townhouse-scale waterfront residences are rare - but ones built to the standards found on Sovereign Island are almost unheard of.

<a href="https://www.apartments.com.au/new-townhouses/ocean-suites-on-jennifer-10-12-jennifer-avenue-runaway-bay-qld-4216">Ocean Suites on Jennifer</a>&nbsp;changes that, delivering a calibre of construction and detailing that places its seven villas well above the typical market offering in this northern Gold Coast pocket.

Ocean Suites on Jennifer will be move-in ready before Christmas this year, giving buyers the chance to spend the summer on the water in one of Runaway Bay’s rare new waterfront residences.&nbsp;

[smartcode_project:default project_id=138718 project_image_fid=214444]

The development is a collaboration between <a href="https://www.apartments.com.au/architects/stuart-osman">Stuart Osman Design</a> and <a href="https://www.apartments.com.au/developers/sand-side-developments">Sand Side Developments</a>, with construction by <a href="https://www.apartments.com.au/builders/alroe-constructions">Alroe Constructions</a>.

Architect Stuart Osman says the intent from the outset was to create a home people would be drawn to. “When you build anything, the design is to make you want to go hang out in this house,” he says.&nbsp;

Ocean Suites on Jennifer’s design features a front façade softened with planter boxes, rear pool areas, and rooftop decks looking over the water.&nbsp;

Inside, voids and high skylights bring daylight deep into the centre of each home, while ceiling heights of 2.85 metres maintain a strong sense of volume.

Each four-level residence spans 345 to 388 sqm, with layouts accommodating multi-generational living - a ground-floor bedroom suite for older family members and upper levels for the rest of the household. A lift connects all floors.

[smartcode_project:default project_id=138718 project_image_fid=214435]

For Andrew Erwin, Director at NPA, the project’s appeal lies in both its location and the detail in execution.&nbsp;

"At Ocean Suites, you’ve got a canal-front setting with direct Broadwater access and a level of finish you’d normally only see in the city’s most prestigious addresses. The four-level layouts, the glass-framed living areas, the private pools, even the extended kitchens, every part of it has been designed with the buyer in mind,” he says.

Those buyers have so far been a mix of Gold Coast locals and interstate purchasers, many seeking a lock-up-and-leave holiday home or a downsized residence without sacrificing space for visiting family.&nbsp;

Older households with teenage children are a recurring profile, drawn to layouts that support multi-generational living and the ability to host extended stays.

[smartcode_project:default project_id=138718 project_image_fid=214432]

Material selection reinforces the project’s quality-first ethos, with every home appointed to a premium standard. Kitchens and ensuites feature engineered stone surfaces, complemented by prestige oak engineered timber floors, Victorian ash hardwood staircases, and soft loop-pile carpet.

Premium lighting, statement pendants, ceiling fans, and Fujitsu ducted air conditioning elevate both comfort and design. Each residence also includes a suite of high-end appliances as standard - Fisher &amp; Paykel integrated fridges, Bosch ovens, induction cooktops and dishwashers, Vintec wine fridges, and Franke sinks.

Beyond the interiors, residents enjoy an enviable lifestyle with rooftop terraces, private plunge pools, fire pit areas, outdoor showers, smart home automation, laundry chutes, and private pontoons.

[smartcode_project:default project_id=138718 project_image_fid=214452]

With no additional upgrade costs, Sand Side Developments underscores its no-shortcuts approach, delivering homes where luxury and amenity come as standard.

Osman adds that the kitchen has been designed as “the main hub of the house” with six metres high skylights above a galley-style layout that “makes it feel bigger, brighter, whiter” and “brings light into the centre of the home.”

Both architect and builder emphasise a shared commitment to delivering the intended design without compromise. “Working with Alroe’s structural team and their construction team, it’s been great to make sure that the look and feel that was originally intended is the result achieved at the end of the project,” Osman says.&nbsp;

[smartcode_project:default project_id=138718 project_image_fid=214453]

Outdoor living has been given equal consideration, with rooftop terraces designed for entertaining with a fire pit and bar, and spacious undercover patios featuring private plunge pools.

The marine access is as carefully executed as the homes themselves. An eight-metre gangway leads to a six-metre private pontoon capable of mooring vessels up to 30 feet, just 300 metres by water from the Broadwater.&nbsp;

Even the orientation of each villa has been optimised to capture long views down the canal, across the Broadwater, and south to Main Beach.

With construction in its final stages, just three of the seven villas remain, priced from $3.365 million to $3.695 million.

[smartcode_project_cta:default project_id=138718]

Sovereign Island standards come to Runaway Bay with Ocean Suites on Jennifer

Without local developer <a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a>, it could be argued that the small suburb of <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a> would be left behind when it comes to both new housing and retail opportunities.

Gardner Vaughan, one of South East Queensland’s most reputable builder-developers, has been based in <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a> for the last decade. They plan to maintain their presence in the northern <a href="https://www.apartments.com.au/developments/brisbane-qld">Brisbane</a> suburb, just seven kilometres from Brisbane Airport and nine kilometres from the city, with the development of <a href="https://www.apartments.com.au/new-apartments/danby-lane-nundah-village-5-danby-lane-nundah-qld-4012">Danby Lane</a>, the first major project in several years in the heart of the town centre.

GVG will retain one of the commercial spaces in the new mixed-use building for their office headquarters. It will be located in the commercial podium, alongside several other new office spaces. Below will be a street-level retail precinct designed to reinvigorate the local economy, and above, 84 brand-new apartments.

[smartcode_project:default project_id=112531 project_image_fid=320114]

Over 60 percent of the apartments have already been snapped up, with buyers eager to secure one of the rare new apartments in <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a>, as well as to benefit from Gardner Vaughan’s solid reputation and long-standing presence in the local community.

[smartcode_project:default project_id=112531 project_image_fid=320117]

Gardner Vaughan identified the site at the corner of Buckland Road and Danby Lane for its proximity to key amenities. Within 400 metres of the development, <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a> Village offers a variety of cafes, restaurants, and pubs. <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a> Train Station, just 400 metres away, provides a quick 20-minute train ride into Roma Street.

The development has also attracted young families, drawn to the proximity of not one, but twelve parks, with Boyd Park and Oxenham Park being the most notable. Established families have shown interest due to the close proximity of <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a> State School and Mary MacKillop College.

The one- and two-bedroom apartments in the building have already been snapped up, while the larger three- and four-bedroom apartments—ranging from a generous 117 sqm to nearly 200 sqm—remain highly sought after. There are also just three exclusive luxury penthouses left to sell.

With its in-house construction capability, Gardner Vaughan has already commenced construction on-site and expects to complete the building by March 2027. It's hard to see another opportunity to buy brand new in <a href="https://www.apartments.com.au/developments/nundah-qld-4012">Nundah</a>, where creating a site anywhere near the scale of the Danby Lane is becoming more and more difficult.

[smartcode_project_cta:default project_id=112531]

Why Danby Lane is the focal point for change in Brisbane's Nundah

<a href="https://www.apartments.com.au/developers/metro-property-group">Metro Property Group</a>’s flagship townhouse development, Citrine Townhomes in <a href="https://www.apartments.com.au/developments/rochedale-qld-4123">Rochedale</a>, has reached another key construction milestone, with the first stage of townhouses now in the defects phase.

All building works for Stage 1 are complete, with the internal roads asphalted, line marking finished, and the bin store slab poured.&nbsp;All essential services, including permanent power, sewer, gas, and water, are now connected and operational.

The defects process is expected to continue until late-August.

<img alt="Citrine Townhomes, Rochedale" data-entity-type="file" data-entity-uuid="f48ad1d8-7bb2-424a-a378-2caa4d34c27d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/017%20-%20%20ROLLEY%20PHOTO%20MEDIA%20%20%20-24072025.jpg?VersionId=o5BC3LgYTwxcufsjldO8mkPww3gix1NC" />

Stage 2 is also moving forward steadily, with all townhouses sheeted, the first coat of paint applied, and joinery installed throughout. Tiling has been completed on six of the seven blocks, and the pool is scheduled to be pebblecreted by the end of August.

Stage 3 continues to gather momentum, with external cladding completed on three of the eight blocks. All townhouses have been fully roughed-in for electrical, plumbing, and air conditioning, and the first two blocks have now progressed to internal sheeting.

Stage 1 and 2 are 100 per cent sold and there are now just 10 four-bedroom townhomes left in Stage 3, priced from $1,125,000.

[smartcode_project:default project_id=136295 project_image_fid=211]

Residents at <a href="https://www.apartments.com.au/new-townhouses/citrine-townhomes-rochedale-311-gardner-road-rochedale-qld-4123">Citrine Townhomes</a> can also look forward to high-quality shared amenities. The residents' facility will feature a pool, landscaped areas, and a BBQ space, contributing to a lifestyle-focused community environment.

Metro’s fully furnished display home has generated strong interest locally, reinforcing the market’s confidence in the project. Stage 1 and 2 are completely sold out and Stage 3 has officially launched and is selling fast. Just 10 townhouses remain for sale in the development.

[smartcode_project:default project_id=136295 project_image_fid=273134]

The broader Citrine development comprises 90 three and four-bedroom townhomes designed across two to three levels, offering a contemporary contrast to Rochedale’s surrounding single-family homes.

Located just 17 km from Brisbane CBD, Citrine is within walking distance to schools, parks, and the popular Rochedale Village, home to Coles, medical services, and dining options.

Metro Property Group remains on track for project completion, with settlements forecast for Stage 1 in October/November 2025, Stage 2 in November/December 2025, and Stage 3 in January/February 2026.

[smartcode_project_cta:default project_id=136295]

First stage of townhouses at Citrine Rochedale reaches completion milestone

The City of Sydney&rsquo;s Affordable Housing Program, endorsed by the Minister for Planning, Rob Stokes, introduces a charge for the delivery new homes that will now apply across Central Sydney and much of the City of Sydney local government area.

Minister Stokes announced last week the making of a new plan that will push up the price of new housing in the City of Sydney.

The NSW Government has signed off on a new tax of up to 3% on the production of new homes in the City of Sydney Council area.

[smartcode_project:default project_id=7317 project_image_fid=79239]

Urban Taskforce CEO Tom Forrest said, &quot;both the Minister and Clover Moore are well meaning, but you don&rsquo;t create affordable housing by adding additional charges to the production of new homes.&quot;

&quot;The NSW Productivity Commission recognised this conundrum in their review of infrastructure fees and charges. This change goes in the very opposite direction. This is a new tax on new homes to be paid by new home buyers.&nbsp;Prices will go up.&quot;

&quot;Housing affordability is one of the biggest issues facing governments at all levels. But the NSW Government has simply done what the Mayor of Sydney wants &ndash; no questions asked &ndash; no economic analysis applied.&quot;

&quot;The key to housing affordability is more supply &ndash; not extra taxes on those who are trying to solve the affordability problem by creating more homes.&quot;

&quot;It is high-time the penny dropped with the NSW Government &ndash; it is the drought of planning approvals that has caused this housing affordability crisis and urgent policy reform is needed.&quot;

&quot;Unfortunately, while well meaning, today&rsquo;s announcement is a step in the wrong direction.&quot;

&quot;Clover Moore is no-doubt popular &ndash; but we are in trouble if we take her advice on housing affordability!&quot;

The NSW Government has signed off on a new tax of up to 3% on the production of new homes in the City of Sydney Council area

jordan_55689

New production tax to push up price of new housing in City of Sydney

<html><body>
I was interviewed for a great story in one of the property magazines, the article was called Keep and Reap and it examines the pros and cons of holding onto property after you finish developing it.
One of the biggest things to consider before you start a development is entry and particularly exit costs - if you are developing to sell.
Around the same time I received a call I had from a guy called Dave.  He said ‘Hi Jo, can you help me with a dual occupancy project’.  To that I replied...’sure Dave, we’d love to. Tell me a bit about your strategy and what you are hoping to achieve from a property development’. 
'Well, my wife and I want to turn over a few developments, you know...complete one, sell and then use the profits to go again. Our aim is to use the proceeds to pay down the mortgage on our principal place of residence and keep investing’.
Dave certainly has a very good plan. As property development project managers, we are not qualified to give accounting or financial advice, but what I do like to check with anyone making this kind of enquiry is that they understand what selling or exit costs are involved.
Dave said he understood there’ll be agent’s selling commission and marketing costs to sell the new villas, we might have to pay some Capital Gains Tax and that’s it I think’. He said.   
My reply...’Are you sure Dave?’
If you take a look at the exit costs, then you may think twice about selling on completion, especially if it’s a small development like a dual occupancy.
In the Hunter Region of NSW where we manage developments for our clients, we can typically create around one hundred thousand dollars in equity on a dual occ project within twelve months. This sounds like a lot of equity to create and it is...if you are holding the properties you’ve built.
By holding on completion you'll not only get the benefits of depreciation and higher than average rental returns (everyone loves to rent a brand new property) but some clients choose to refinance and by doing this they can access some of the equity that’s been created through the development process.
But, if you are looking to sell on completion, then there is a whole list of costs you need to consider.
The big one is GST and as I explain this to Dave, I highly recommend he checks this out closely with his accountant.  GST is applicable when you sell new property, so Dave would need to ensure he pays 10% of his selling cost to the government. If he is not registered for GST, he can't claim back the GST he's paid over the life of the development so he's essentially losing 10% on his sales. However, if he holds the properties for five years, they are no longer deemed new and no GST is applicable.
Finance costs are another cost to consider. Dave needs to check with his lender what fees and charges may be applicable when he sells, these may include a prepayment fee, settlement fee, early exit fee or Government mortgage discharge fees.
There will be legal fees for your solicitor to prepare Sales Contracts and manage the conveyancing for you.
In some instances, Land Tax may also be payable on a property that is being sold.
Then of course, the sales agent's commission, marketing costs and perhaps auctioneer costs.
Also consider the holding costs. During the sales process you probably won't rent the villas and they'll be sitting empty on a fully drawn construction loan.
One of the advantages to holding and renting the properties on completion is that the interest you pay during the development process is tax deductible. However, if your intention is to sell on completion then you lose this important deduction during construction but also during the selling period.
I recommended Dave have a meeting with his accountant to make sure he understood the implications of selling.  A few weeks later, he called to tell me he's switched strategy and wanted to hold onto his properties. One of his reasons was to take advantage of the higher depreciation benefits and he wanted to build a property portfolio. His accountant showed him just how much income tax he could save himself as he was in a high tax bracket.
It wasn't long before we had found him a great site in Newcastle with a potential gross yield of 7%. This strong yield will make it easier for Dave to hold and continue on his property investment journey.
By going through the exercise of weighing up the pros and cons of holding, it helped Dave realise that if you are going to the trouble to develop property in the right location, you may as well hold to reap the immediate and future rewards. 
 
Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.
</body></html>

jochivers-wq5Bp59R5a

Is it really worth selling on completion? Jo Chivers

<html><body>
GUEST OBSERVATION
Self-managed superannuation funds (SMSFs) are the fastest growing sector of the superannuation industry, <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/SMSF/Self-managed-super-funds--A-statistical-overview-2010-11/?page=4#Growth_of_SMSF_sector" target="_blank">spiking</a> by 33% between 2008 and 2012, putting them in the sights of both the super industry and the Australian Taxation Office.
From July the ATO will be able to levy individual <a href="https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/SMSF-News/SMSF-News---edition-29/?page=2#Be_prepared_for_new_penalty_powers">fines</a> of up to A$10,200 on fund trustees who breach superannuation law, a step up from the previous environment where breaches could only result in making a fund “non-compliant”, or a referral to a court for penalties.
But many superannuation industry representatives want more regulation of self-managed super funds, with calls to the current financial system inquiry ranging from <a href="https://www.propertyobserver.com.au/https://www.financialstandard.com.au/news/view/39283887" target="_blank">regulating the funds as a financial product</a>, to <a href="https://www.propertyobserver.com.au/https://www.financialstandard.com.au/news/view/39104282">forcing</a> fund trustees to use a financial planner when the fund borrows money to invest in property.
The current benefits of SMSFs
SMSFs are perceived as giving tax advantages to their members, but they are taxed at the same (concessional) rates as other superannuation funds, and must comply with similar regulatory requirements: the main technical differences are in the administration of the fund, and the control that the member/trustees of an SMSF have in devising an investment strategy. The tax advantages that members of SMSFs do obtain are largely through the characteristics of the structure and the profile of SMSF members.
However there are some regulations that apply specifically to SMSFs; and others that in practice are more relevant to SMSFs than other types of superannuation funds.
A SMSF is a superannuation fund that has fewer than five members, and these members are also the <a href="https://www.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s17a" target="_blank">trustees</a> of the fund. This gives the member/trustees the flexibility to devise and control an investment strategy that meets the needs of its members, as required.
One of the key reasons that many members of SMSFs give for choosing an SMSF as an investment vehicle is the level of control it gives them over their investments. However this places a high level of obligation on the trustees, and also exposes the members of the SMSF to risk which the trustees must manage.
SMSFs are not eligible for financial assistance where the fund has suffered loss due to fraud or theft, and do not have access to the Superannuation Complaints Tribunal to resolve disputes.
Funds must already pass the sole purpose test
All superannuation funds are required to meet the sole purpose test, which requires that the purpose of a superannuation fund must be to provide benefits to members in retirement and, in the event of their death, their dependants.
The regulatory framework for all superannuation funds is designed to support this core purpose, but SMSFs are particularly impacted: for example the law prohibits a fund from intentionally acquiring an asset from a related party, or loans or other financial assistance to the members of a fund.
But there is room for bias…
There are long-standing exclusions from the non arms-length rules that allow a SMSF to pay market value to purchase business real property from or lease it to a related party. This allows a person establishing a SMSF to transfer business premises to their superannuation fund and lease the property back from the superannuation fund, a strategy frequently used by business owners to provide an income stream to the fund.
One of the issues around SMSFs is ensuring that the trustee/members properly recognise the separation of superannuation assets from assets that are personally owned and controlled, and the regulations are designed to preserve that separation of assets. For example, from 2011 investments by SMSFs in certain collectibles, including artwork, wine, antiques or memorabilia were subject to regulations regarding these investments that regulate the use of certain collectible assets by members so that they cannot be used by or stored in a member’s residence.
The other exclusion that has gained much coverage during the recent property boom is the rule which overrides the prohibition on borrowing. In principle the trustees of a superannuation fund are not permitted to place members’ retirement funds at risk, thus the power to borrow is restricted. This restriction was eased in 2010 to allow borrowing by any regulated superannuation fund where the borrowing is linked to a specific asset. The provision is particularly relevant to SMSFs due to the structures used to comply with the requirements and the relative scale of the funds held by SMSFs.
This is where the flexibility and investment strategies of SMSFs become relevant. If the members have a bias toward investing in real property, then they may devise an investment strategy incorporating borrowings; whereas other investments with lower capital requirements, such as property trusts, could be funded without borrowing.
However the biggest tax advantage that SMSF members obtain flows from the profile of the SMSF investor. Members of SMSFs typically have <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/SMSF/Self-managed-super-funds--A-statistical-overview-2010-11/?page=39#Table_11__SMSF_member_age__balances_and_taxable_income__contrasting_with_non_SMSF_member_taxable_income" target="_blank">higher income levels</a> than members of other superannuation funds across all age groups, and their account balances are correspondingly higher. Further, the nature of the fund makes it attractive to investors who take an active interest in their superannuation strategies, despite the risks.
In the meantime the rapid growth in the sector, combined with the level of control that trustees have over the assets of the fund, raises the risk that trustees will make poor decisions: either through not being sufficiently informed in respect of an investment or through pushing the boundaries of the SMSF structure.
There seems to be something inconsistent in a system that mandates savings but then allows those savings to be put at risk through insufficient regulation. It is time for the sector to be examined more closely.
HELEN HODGSON is senior lecturer at the School of Tax and Business Law at the <a href="https://www.unsw.edu.au/" target="_blank">University of New South Wales</a>.
Helen is a member of SPAA.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
</body></html>

hhodgson-WTYf8w7F7q

Taxing times for self-managed super funds

<html><body>
There are tax issues for Australians living overseas but who want to buy property back home.
It in important the familiarise themselves with Australian tax obligations to avoid nasty surprises from the ATO.
Among the first things to establish is the tax residency status. They will be treated as tax resident of Australia if they meet certain criteria.
Some of the things that determine residency include nationality, where you were present and for how long, where you have a home, and your economic and business ties with the country. 
If you have stayed in Australia for more than six months of the financial year (1 July to 30 June), you will be a tax resident of Australia.
Then there's the domicile. If your domicile remains in Australia and you do not have a permanent place of residence overseas, you will be treated as an Australian tax resident.
If you are a tax resident of Australia, your worldwide income and capital gains are generally subject to Australian tax.
For non-residents, only income earned in Australia and capital gains on ‘Taxable Australian Property’ are taxable in Australia. Any income or capital gain from a property in Australia will always be treated as having been sourced in Australia, hence taxed.
Also watch out for countries with Double Tax Agreement (DTA) with Australia, where the provisions of the DTA may override the domestic law in both Australia and the other country.
If the other country also taxes the same income or capital gain, Australian tax rules generally provide a foreign income tax offset on any foreign tax paid on the same income or capital gain.
There is no substitute for professional tax advice.
Take the common example of an Australian expatriate who buys a home back in Australia while still resident of another country, including for tax purposes.
The house rented until the expat eventually returns to Australia, when it will become the family’s home.
The capital gains tax (CGT) treatment when the home is eventually sold will be influenced by the length of time when the property was not the expat’s main Australian residence.
An expat’s CGT position after owning the property for 10 years but home for only the final two of those years, would, according to Joe Galea, property tax partner for accountants Deloitte in Sydney, see a fifth of any net capital gain taxable.
</body></html>

jonathanchancellor-7SQnKwU6yx

Australian expatriates are to watch their tax obligations

<html><body>
Hi Margaret,
We have a 1 acre or 4000 sq metre block of land , zoned farming in country Victoria. We bought it in July 2014 as an investment to develop it as a future home site.
If I sell a block of land with contract of sale dated in 2017 financial year, but settlement is in 2018 financial year, is CGT based on contract of sale date or on settlement date? It will make a difference as we will be retired in 2018 financial year and will be in  a different tax bracket.
The block of land, zoned farming, did not have a planning permit to build a dwelling or shed and has generated no income while we have owned it but we have made improvements. Are the cost of the improvements deductible? We have planted 600 trees at a cost of $1100.
We have drawn up a set of house plans and successfully applied for a planning permit to build a dwelling and shed at a cost of $1400. Are maintenance costs deductible?
E.g. 100 trips to the block of land to mow lawns, water trees, earth moving costs to remove dead trees, loan costs and purchase costs and selling cost.
Can we deduct stamp duty on purchase? Legal costs on purchase? Loan borrowing costs? Loan interest from date of purchase to date of sale? Loan discharge costs? Legal costs on sale of land? Council rates from purchase date to sale date? Break fees on a fixed loan for the land purchase if I sell before the 4 year fixed term is completed?
Thanks for your suggestions
Regards
Kevin
 
Hi Kevin,
According to the Australian tax office:
When you sell or otherwise dispose of real estate, the time of the event (when you make a capital gain or capital loss) is usually:
<ul>
<li>when you enter into the contract (generally the date on the contract), not when you settle – the fact that a contract is subject to a condition, such as finance approval, generally doesn't affect this date</li>
<li>when the change of ownership occurs if there is no contract (such as when a property passes to a beneficiary), or</li>
<li>if the real estate is compulsorily acquired – the earliest of</li>
<ul>
<li>when you receive compensation from the acquiring entity</li>
<li>when the entity became the property's owner</li>
<li>when the entity enters the property under a power of compulsory acquisition, or</li>
<li>when the entity takes possession under that power.</li>
</ul>
</ul>
In your case this means the event occurs in 2017 and this is the year the tax becomes due and payable.  If you have already lodged your tax return before settlement and the receipt of the proceeds, you would need to request an amendment to the prior year’s return. 
As for the remainder of your questions, you do need specific advice which takes into account all of your circumstances, including the purpose for which you originally bought the property and your intentions at the time.  Generally speaking though, I can tell you that:
1.   If this is not a working farm the zoning should not impact deducibility of any bona fide investment property related deductions.  You will need to get some specific advice around the planting of the trees, though, as they may not be deductible, unless such planting was required for the purposes of earning property related income.  
2.   Improvements to a rental property are deductible as long as the purpose for the block was to build an investment, and not to build future own home. 
3.   Once a property becomes income producing, maintenance costs are deductible.  If your intention was to build a property to rent out but instead you sell, some of your costs may become capital costs, but again this one would have to be determined by your accountant.
4.  You have a large list of other costs and again, their deductibility depends upon the reason you bought the block – if it was for an investment some may be considered capital costs (and so add to your cost base for the purposes of determining capital gains tax) and others, as long as the property was income producing, may be deductible as yearly expenses.  Even some costs which are normally yearly expenses can be added to the cost base in certain circumstances.  
It is critical that you consult with a highly skilled accountant who has experience in this area to be sure that you get the right advice.  Remember, regardless of what any one tells you, the responsibility for making the right claims rests with the tax payer.  Bad advice won’t get you out of trouble if you make an incorrect claim.
 
Have a property question?  <a href="mailto:news@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
</body></html>

mlomas-KC9MUPZ6Ca

Ask Margaret: Is CGT based on contract of sale date or on settlement date?

<html><body>
RE/MAX Western Australia’s managing director Geoff Baldwin has spoken out against potential changes to current stamp duty dispensations for first home buyers, saying that if the relief was decreased or abolished there would be dire effects across the market.
 “The negative affect the ceasing of stamp duty relief for first home buyers would be extremely damaging however, when this segment of the market stagnates it ripples up through all price ranges and the effect would be crippling”, said Baldwin.
“If you take a line through New South Wales and Victoria where subsidies have been abolished, first home buyer activity has dropped to 8% and 12% respectively, compared to the current 22% in Western Australia (RP Data).
“Historically, in a healthy market, first home buyers account for around 25 to 30% of all buyers.
“The established home market has already taken a massive hit through the government’s recent actions in changing the First Home Owner Grant whereby those building new homes receive $7,000 and people buying established only $3,000.
“To abolish first home owner stamp duty concessions would be extremely short sighted as it will a negative impact the whole market and hence the Industry, just at a time where we are again experiencing some prosperity in the property sector.”
 
</body></html>

jrichardson-uRX5hFdKfN

Rumoured cuts to stamp duty relief for first home buyers would be “extremely damaging”: RE/MAX

<html><body>
As the end of the financial year approaches, self-managed super fund (SMSF) trustees can employ a number of strategies to legally minimise their tax payments.
Graeme Colley of the SMSF Professionals’ Association of Australia says those strategies include after-tax and age-specific tax contribution.
“Making after-tax contributions to super, which could come from your personal savings, transferring personal investments or an inheritance, is one effective way to minimise tax,” says Colley.
While the maximum personal after-tax contribution for this financial year is $150,000, those aged 65 or over can contribute up to $450,000 over a three-year period.
“This allows you to make substantial contributions to super and build your retirement savings,” Colley says. But he warns SMSF trustees not to go over the after-tax contribution caps, with excess contributions attracting tax rates up to 46.5%.
The after-tax contribution cap will rise for the next financial year, says Colley.
“Remember, too, that from 1 July 2014, the after-tax contributions cap increases to $180,000. This means if you can trigger the bring-forward rule that a total of $540,000 can be contributed over the fixed three-year period.”
He explains that SMSF trustees who are aged 60 and over have a maximum tax deductible contribution cap of $35,000.
“These contributions include amounts you make as salary sacrifice, the Superannuation Guarantee or, if you qualify, personal deductible contributions. If you want to maximise your contributions before 30 June, make sure you talk to your accountant, tax agent or professional adviser so that your salary sacrifice agreement with your employer allows the maximum to be salary sacrificed,” says Colley.
Regulations apply to those aged 65 or over who still want to contribute to their SMSF.
“If you are 65 or older you will need to meet a work test to contribute to super in most cases. You will need to work for at least 40 hours during 30 consecutive days at any time during the financial year to make tax deductible and non-deductible contributions to super,” says Colley.
Once you reach 60 years old, all lump sums that you extract from your super fund is tax free, with some exceptions for government funds.
“However, before age 60 any lump sums that include a taxable component can be taxable. The taxable component includes the tax deductible contributions plus any income that has accumulated in your superannuation benefit. No tax is payable on taxable amounts of up to $180,000, in total, you receive before age 60. This amount is indexed annually,” says Colley.
He says that if trustees are eligible to draw from their superannuation, it may benefit them to wait until they are over 60 years old, or a later financial year.
</body></html>

Tax minimisation strategies for SMSF trustees: SPAA

<html><body>
A Federal Court judgment this month provides telling lessons for members of self-managed super funds (SMSFs), including those operating small-medium businesses.
The court personally fined the husband-and-wife directors of their SMSF’s corporate trustee a total of $50,000 for a series of contraventions of superannuation law, including the making of 80 “loans” to members, namely themselves.
Fund money was also used to buy study cattle “for hobby purposes” as well as to pay veterinary bills and other related expenses without the fund earning income from the expenditure. The couple, who were the only members of their SMSF, operates a livestock business in Victoria.
Further, the trustees allowed their son to live in a fund-owned property without paying the rent required under the lease. And the fund had spent $48,500 on furniture before the lease commenced.
This court case – <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2014/2014fca1101">Deputy Commissioner of Taxation (Superannuation) versus Graham Family Superannuation Pty Ltd, Ian Christopher Graham and Carolyn Ann Graham</a> – illustrates the risks when SMSF members mix their superannuation and their non-superannuation finances.
Peter Bobbin, principal of lawyers Rockwell Olivier in Sydney, says: “Without doubt, the couple used the super fund as a personal bank to fund their [pre-retirement] lifestyles.”
There is no suggestion in the judgment that the husband-and-wife trustee directors/members in this case used money from their SMSF in relationship to their business. However, Bobbin and Chris Malkin, the senior consultant auditor with Baumgartner Superannuation, say the case represents a warning for SME owners about the dangers of mixing their super, their business and personal finances.
“This case reminds me of the need for SME owners to quarantine their superannuation from their business activities,” says Bobbin. And Malkin believes that SME owners can face a greater temptation than other members to use their super money for purposes other than for their retirement.
“The simple reason is that the cash-flows of SME owners are sometimes stretched and some may see their super fund as a pseudo bank,” says Malkin.
The couple’s contraventions of superannuation law included breaching superannuation’s sole purpose test, providing financial assistance to members, exceeding the limits on in-house assets and failing to conduct dealings on an arm’s length basis.
This case should reinforce to SMSF members regarding some of the most fundamental provisions in superannuation law. These include:
<ol>
<li>The sole-purpose test: A super fund must be maintained for the purpose of providing retirement or death benefits to members.</li>
<li>The ban on providing financial assistance, including loans, to members or their relatives: Significantly, there is no exemption under the in-house rule (see next point) to the ban on providing financial assistance to members.</li>
<li>The in-house asset rule: SMSFs are generally prohibited from making loans, providing leases or having investments with related parties and entities that exceed 5% of its total asset value. (One of the very few exemptions to the in-house asset rule is business real estate.)</li>
<li>Arm’s length investments: A fund must make investments on an arm’s length, commercial basis.
</li>
</ol>
As Peter Bobbin of Rockwell Olivier says, the ATO in this instance did not revoke the SMSF’s complying status but had decided to pursue the trustees through the court.
When an SMSF is declared non-complying, its assets – less any after-tax, non-concessional contributions – are taxed at the highest marginal rate. This is widely regarded as an ultimate sanction against an SMSF.
Stuart Jones, author of the Australian Superannuation Handbook 2014-15 (published by Thomson Reuters) expects that the ATO is likely to apply its new administrative penalty regime, in force from July this year, to similar cases in the future.
Under the new penalty regime, the Tax Office can directly and personally fine SMSF trustees by imposing an administrative penalty (ranging from $850 to $10,200) intended to match the seriousness of the contravention. Therefore, the ATO does not have to go through the expensive and time-consuming process of seeking court-imposed penalties.
Jones says the commissioner still has the option of applying for a civil penalty court order of up to $220,000 for each offence, or even instituting criminal proceedings in certain cases.
Given the large number of contraventions in the Graham family matter, Malkin suspects the overall penalties would have been significantly higher if it had been dealt with under the new penalty regime.
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.
</body></html>

mlaurence-vhAHaLZT8y

SMSFs warned against using fund as 'personal bank'

<html><body>
Property investments by SMSFs through limited recourse borrowing arrangements (LRBAs) could come under increased scrutiny of the tax office this year, says major accounting firm H&amp;R Block.
Last year, the ATO had expressed concern at LRBA loans that were not structured correctly, including incorrect registration of the ownership of property bought under an LRBA. It spoke of increasing its focus on the LRBA route.
Given the growth in the SMSF sector and the increasing popularity of strategies such as LRBAs, H&amp;R Block has tipped that property will remain a top priority for the ATO’s compliance work in the SMSF sector this year.
“I know the ATO always keeps a close eye on property investment and especially LRBAs,” H&amp;R Block's director of tax communications, Mark Chapman told SMSF Adviser.
This particularly applies to related party borrowings which may currently be structured on non-commercial terms, with a June 30 deadline to have these structures rectified, it said.
According to the ATO website, an asset purchased by an SMSF trustee through LRBA is held in a separate trust.
If the loan defaults, the lender's rights are limited to the asset held in the separate trust, but not to assets held in the SMSF.
In 2015, an ATO campaign saw 500 postcodes issued with warnings urging holiday home owners to ensure deductions were not made during periods a property was not available for let.
“With property rental a valuable source of extra income for millions of taxpayers, it can be expected that the ATO will follow up with some targeted reviews and audits this year,” Chapman was quoted as saying.
The “sharing economy” – “driven in part by the high levels of non-compliance amongst those driving for Uber or renting rooms through Airbnb,” would also be an area of scrutiny by the ATO, he said. 
</body></html>

prateek24-ezbwHMbNAk

ATO to focus on LRBA route to property investment by SMSFs

<html><body>
Being the trustee of a self-managed super fund (SMSF) gives you the opportunity to manage your own superannuation investments and make your own investment choices.
As the trustee and member of a SMSF, you can have full control over how your retirement savings are invested, whether you want returns from property, shares or even art and collectables.
If you’re thinking of setting up a SMSF, your duties as a trustee will include devising an investment strategy, accepting contributions and paying benefits.
The Australian Taxation Office (ATO) is the authority of SMSFs, enforcing the majority of regulations and restrictions that apply to the investment strategy. This morning Peter Iordanidis of the ATO provided an overview of SMSFs for trustees. 
Some top tips to ensure your fund is compliant:
<ol>
<li>
 Understand the sole purpose of your fund As a trustee, you must ensure that the sole purpose of your SMSF is to provide for its members in retirement. Even if you use a professional to do certain tasks on your behalf, you still must comply with super and tax laws to protect your members’ assets. To ensure that you get the full tax concessions available to SMSFs, you must pass the sole purpose test. Your investment decisions should be based on increasing returns to your fund. You need to consider diversification, risks and likely returns from your assets. You also need to consider your members’ needs and circumstances – even if you are the only member. For example, if you’re nearing retirement age, you may want to change your SMSF asset mix to include more low risk, low reward investments.  
</li>
<li>
Make sure you don’t get any benefit pre-retirement… With post-retirement benefits the sole purpose of your SMSF, you must ensure that you don’t use the fund to get any current day benefits, or you face penalties including the loss of your tax concessions, fines up to $220,000 or up to five years’ jail time. Trustees are prohibited from dipping into their funds to pay for bills, school fees or for any non-retirement investments. As a trustee you are prohibited from borrowing money from the SMSF pre-retirement (with some exceptions) and all transactions made with your SMSF must be made “at arm’s length”. Trustees must make and maintain investments on a strict commercial basis, while the purchase and sale prices of fund assets should always reflect true market value. You can use your SMSF to invest in a wide variety of assets, even art and collectables. You can use your fund for artwork and collectables, but you cannot enjoy a direct or indirect benefit from the investment by displaying it in your home or business prior to retirement. 
</li>
<li>
…And your family doesn’t either A fund is prohibited from lending money to a member of the fund or a relative of a member. The definition of relative is quite broad – this can include siblings, parents, children, and extended family members. The definition also covers the spouse of any family members. That means that you can’t lend money from your SMSF to your sister-in-law. Your SMSF is also prohibited from providing financial assistance to a member or a member of a relative, whether directly or indirectly. This means can’t use your SMSF as security for your child’s mortgage. Iordanidis provided the example of a husband and wife who were trustees of their SMSF. Their SMSF sold a property it owned, but no money was paid for the property, as the sale contract created a loan between the fund and the purchasers. However, it turned out that the purchasers were relatives of the husband and wife, which meant that they had made a loan to family members. The trust incorrectly advised the ATO that the loan was repaid in full, and the fund was deemed non-complying and stripped of its tax concessions. Trustees are generally prohibited from acquiring non-cash assets from related parties – a rental property, for example. 
</li>
<li>
Do your paperwork (or get someone else to do it for you) As a trustee for a SMSF, you have a range of annual responsibilities. You must keep your records up to date and value assets at their current market value at least once a year. You have to prepare financial statements, lodge an annual return and report contributions, even if no contributions were made that year. You’ll also need to lodge an income return every year from the year you set up your fund, for each member. Most of those duties can be performed by an accountant, but it’s your responsibility to make sure they are done and lodged with the ATO. The ATO also requires an audit of your SMSF each year, performed by an approved SMSF auditor who is registered with ASIC and has a SMSF Auditor Number. The auditor can’t be a trustee member of the fund, or your accountant who prepares your other financial statements. You’ll also need to make sure you appoint the auditor early enough for them to do the audit and for you to submit it.  An audit is required even if you haven’t made any contributions in the year.  When you engage professionals, make sure you have a clear understanding of their responsibilities. Any contraventions of super or tax law that are identified by your auditor must be fixed. You can ask the ATO for advice on how to go about rectifying any mistakes you’ve made.
</li>
</ol>
There are a range of other rules and regulations surrounding SMSFs that you need to know to receive full tax concessions (and avoid penalties). Go to the <a href="https://www.ato.gov.au/" target="_blank">ATO's website</a> to learn more.
YOU MAY ALSO LIKE TO READ:
<a href="/guides/ato-cast-doubts-on-smsf-property-zero-interest-loan-strategy">ATO cast doubts on SMSF property zero interest loan strategy</a>
<a href="/guides/taxing-times-for-self-managed-super-funds">Taxing times for self-managed super funds</a>
<a href="/guides/investors-should-expect-smsf-borrowing-to-come-under-greater-government-scrutiny">Investors should expect SMSF borrowing to come under greater government scrutiny</a>
</body></html>

tax

Editor's Picks

Have something to contribute?

The latest real estate & off the plan properties & news, delivered to your inbox.

Developments

New apartments

New townhouses

News

The latest real estate & off the plan properties & news, delivered to your inbox.

tax

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

The latest real estate & off the plan properties & news, delivered to your inbox.

Developments

New apartments

New townhouses

News

The latest real estate & off the plan properties & news, delivered to your inbox.