2025 has been a year of significant change for property owners. Here’s a summary of the most important developments and practical tips from across the year.
Major Market & Legislative Changes
SMSF $3 Million Cap – Division 296
Assuming the legislation passes, from 1 July 2026 the Federal Government will introduce the Better Targeted Superannuation Concessions under Division 296.
Key Points:
- Two-Tier Tax System
- 15% on realised earnings linked to balances between $3 million and $10 million
- 25% on realised earnings linked to balances above $10 million
- Indexation -both thresholds will be indexed to CPI.
- No Tax on Unrealised Gains - tax applies only to realised earnings (actual income and gains).
Why It Matters: Property often forms a large part of SMSF portfolios. Accurate valuations remain critical, and the ATO has been active in enforcing compliance.
ATO Guidelines – Market Valuations for Tax Purposes
Annual reporting requirements remain unchanged, and the ATO continues to focus on compliance. Valuations must:
- Annual Valuations – Trustees must obtain annual valuations for SMSF-held properties.
- Objective Evidence – Reports must include methodology and comparable sales data.
- Professional Valuations – Accredited valuers are recommended over council rates or agent letters.
- Compliance and Penalties – Failure to comply can result in tax liabilities and penalties.
Read more: https://acumentis.com.au/news/smsf-property-valuations-compliance-update/
Construction Cost Escalation
Building costs rose in 2025, heightening underinsurance risks. Although growth has slowed, volatility persists, making regular insurance valuations critical.
The national average escalation rate is 5.3%, with Brisbane and Gold Coast higher at 6-7%, highlighting the need to factor in local conditions.
Insurance Council of Australia (ICA) reports that 83% of property owners are underinsured, and this figure is likely to rise as construction costs increase.
Ref Source: Australian Construction Market Conditions Report
Top Tips from 2025
- Maximise Tax Depreciation: Don’t just assume—get advice. An older property may have had upgrades or renovations that qualify for additional deductions. If in doubt, speak to us to ensure you’re capturing every opportunity.
- Plan Ahead for Strata & Sinking Funds: Accurate forecasts help avoid unexpected levies and maintain asset value.
- Review Insurance Valuations Regularly: Annual updates protect against underinsurance and ensure compliance with lender requirements.
Looking Ahead to 2026
Compliance and cost efficiency will remain front of mind. Early planning for valuations and depreciation schedules will help you stay ahead of regulatory changes and market shifts.
How We Can Help
- Insurance Valuations – Stay protected against rising rebuild costs.
- Tax Depreciation Schedules – Maximise deductions before EOFY.