Property Repairs and Maintenance
Property Repairs and Maintenance in SMSF – What Trustees Need to Know
To begin with, property repairs and maintenance in SMSF must follow specific ATO rules. As a trustee, you must ensure your fund’s expenses comply with these rules, especially when it comes to property. At SMSF Depot, we help you manage all aspects of repairs and maintenance in line with superannuation laws.
Repairs vs Improvements – Know the Difference
In particular, the ATO draws a clear line between repairs, maintenance, and improvements. Therefore, knowing the difference is important for compliance and tax treatment.
Repairs and maintenance involve fixing or restoring an existing feature (e.g. repainting walls, fixing plumbing).
Improvements change the character or increase the value of the property (e.g. adding a new room).
Importantly, only repairs and maintenance are allowed as ongoing SMSF expenses. On the other hand, improvements may require different treatment, especially if borrowing is involved.
When Can an SMSF Pay for Repairs?
Your Self-Managed Super Fund can pay for repairs and maintenance using fund money if the expenses are related to the fund’s investment property and:
The property is currently legally owned by the SMSF
The fund is not under a borrowing arrangement (LRBA), or if it is, the repair does not alter the asset’s character
The work is not performed by a related party unless there is an arm’s length agreement
Example: Fixing a leaking roof is allowed. Converting a garage into a bedroom is considered an improvement.
Repairs Under Limited Recourse Borrowing Arrangements (LRBA)
If the property is held under a borrowing arrangement:
Only basic like-for-like repairs and maintenance are permitted
Additionally, structural changes or improvements are not allowed during the loan period
Breaking this rule may result in non-compliance and severe ATO penalties.
How SMSF Depot Helps with Property Expenses
At SMSF Depot, we provide end-to-end support to ensure your SMSF property repair costs remain compliant. This way, your fund avoids costly mistakes. Our team assists with:
Categorising repairs vs improvements
SMSF accounting for repair costs
Keeping expense documentation for SMSF audits
Ongoing guidance and compliance checks
Record Keeping for SMSF Property Maintenance
To ensure compliance, good record-keeping is essential. Your SMSF should keep:
Invoices, receipts, and contractor agreements
Photos of the property before and after repairs
ATO rulings or guidance related to the expense
Frequently Asked Questions
Can my SMSF pay for kitchen renovations?
Yes, but only if it’s a repair, like replacing a broken countertop. Otherwise, full upgrades may be classed as improvements.
Can I do the repair work myself?
Only if you’re not a related party, or you charge at market rate under a formal agreement.
Are repair costs tax-deductible for my SMSF?
Yes, in most cases. Repairs and maintenance are generally deductible against rental income.
Start Managing SMSF Property Repairs with SMSF Depot
Property repairs and maintenance in SMSF can be tricky. With SMSF Depot, you’ll get expert help to keep your fund compliant, efficient, and ATO-ready.
Contact us today to manage your SMSF with confidence.