Property capital/improvement costs

If your SMSF assets include direct property, you will incur two kinds of expenses:

  • Operating costs, such as agents commissions, advertising fees, repairs and maintenance, cleaning,  body corporate costs, utilities costs, travel, insurance, etc.
  • Costs that can be capitalized to impact on the value of the asset (Property acquisition costs, building, renovations and other improvements, fittings and fixtures, etc. and depreciation)

It is important to correctly allocate each incurred expense to ensure that the asset value correctly reflects the costs of acquisition, improvement, and depreciation and that operating costs are correctly coded to an appropriate Expense Account.

  • Capitalized costs should be allocated to Investment Account 1-1170 or to one of the 1-1170-nn accounts.
  • Operating costs should be allocated to Expense Account 5-1150. When entered as Expenses, these costs can be further categorized by selecting from a drop-down list.

To record capital costs associated with a property, first select the Property from the Asset List.