Self Managed Super Funds and Property Depreciation (Part 2)
IN THE FOLLOWING EXAMPLE, your SMSF owns a commercial warehouse purchased for $700,000 with a rental income of $1,200 per week … resulting in a total income of $62,400 per annum.
Expenses for the property such as interest, rates and management fees totalled $42,000. Therefore, the net earnings of this commercial property was $20,400.
Without claiming depreciation, your SMSF would have to pay 15% tax on the net earnings, which would result in a tax payment of $3,060. By claiming $14,500 in tax depreciation, the total earnings is reduced to $5,900 leaving the total tax payable of just $885. [Read more…]