While owning business property has always been a popular strategy, with the changes to the rules around super loans (Limited Recourse Borrowing Arrangements), more trustees are choosing to own property directly through their SMSF. Potentially, the taxation benefits come from holding an investment asset in a lower or zero tax vehicle, rather than claiming tax deductions. However, it can still be important to optimise these deductions.
And of course, deductions are only available to those funds paying tax (ie those in accumulation mode). If your SMSF is in pension mode and the property is supporting the payment of the pension, then the SMSF won’t be paying any tax – so there are no deductions that can be claimed.
Here’s a quick guide to some of the more common property deductions your fund may have.