Ensure you never miss an issue of the
real estate business bulletin
Renovations get nod for self-managed super funds

Renovations get nod for self-managed super funds

by Reporter 0 comments

Staff Reporter

A draft ruling by the Australian Taxation Office (ATO) has given self-managed superannuation fund members the ability to use money from inside their fund to renovate their property.

Previously, the ATO said SMSFs could not use money from any source to improve property, however, under the draft ruling they can potentially renovate to improve the value of the property.

Charterhill Group Chartered Accountants chief executive officer George Nowak told sister Real Estate Business title Smart Property Investment that the draft ruling would ultimately make real estate a more attractive option to the $420 billion SMSF sector.

“We have been in support of this outcome since the 7th July 2010 when the remodelled legislation was delivered. It is an absolutely positive move,” he said.

According to Mr Nowak, the drafted legislation clarifies some nuances of error in the original legislation.

“The ATO understands that the future buoyancy of the property market will be heavily dependent on SMSFs’ investing in property as well as providing rental occupancies for younger people.

“This new drafted legislation, which will almost certainly become law, addresses everything everyone I have spoken to in the industry has been scratching their heads over.”

But while SMSF trustees will be able to renovate using money within their funds, borrowing to renovate will remain prohibited.

Ken Raiss, director of Chan & Naylor, told Smart Property Investment, the prohibition of borrowing to renovate property held in a SMSF was very difficult to understand.

“Hats off to the ATO – a lot of good things have come out of this draft ruling,” he said.

“The fact that you can now renovate, with non-borrowed money, is very good.

“But the main problem is that the ATO’s draft ruling neutralises or diminishes the sole purpose test which is to provide retirement benefits to members.”

With the ability to manufacture capital growth through renovation a big drawcard for property investors, the same capacity should also be available through SMSFs, he said.

“If you’re looking to provide retirement income you should be allowed to maximise it.”

Mr Raiss said he hoped the ATO would consider this when it came to finalising the ruling in the next month or so.

le>.b-autolinks{text-decoration:underline}.b-autolinkshadowbox { display: inline; position: relative; cursor: pointer; color: #428bca;} .b-autolinkshadowbox:hover > span { display: block !important; } .b-autolinkshadowbox__links { white-space: nowrap; z-index: 999; display: none; left: 0; border: 1px solid #bfbfbf; border-radius: 5px; font-size: 12px; top: 12px;color: #000; padding: 10px; position: absolute; background-color: #FFF; box-shadow: 0px 0px 20px 1px #bfbfbf; } .b-autolinkshadowbox__links > a { display: block; padding: 3px 0; }
Renovations get nod for self-managed super funds
lawyersweekly logo
promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

The REB Top 100 Agents ranking is the foremost ranking of agents in Australia. It has set the bar for excellence in Australian real estate. To be ranked as an REB Top 100 Agent is the standard real estate professionals strive for. See the full 2018 ranking here!

featured podcast

featured podcast
An industry where the resilient succeeds

Tim Heavyside believes that a strong support team and good foundations are paramount to success in the real estate industry, and with regu...

View all podcasts

Would you consider working for Purplebricks or a similar 'DIY' model?

Yes (7.2%)
No (80.9%)
Perhaps - make me an offer (12%)

Total votes: 209
The voting for this poll has ended on: July 13, 2018
Do you have an industry update?