Safe as Houses: The Benefits of Buying an Investment Property through Your Self-Managed Super Fund

Self-managed superannuation fund (SMSF) is a method of saving for your retirement benefits. The uniqueness of this fund is that it allows you greater control over how and where to invest the fund. The trend of investing in the property with the super fund has become increasingly popular, but it is an investment decision that require careful and in depth consideration. You need to ensure that the decision supports your investment strategy and avoids unnecessary risk.

Invest In Property through SMSF

SMSFs can use borrowed money to buy a single asset or a collection of identical assets that carry the same market value. The trustees of the fund receive the interest in the asset but the legal possession of the asset belongs to the trust. There are many advantages to investing in property through your super fund.

Tax Savings

The main tax saving potential associated with investing in property with your SMSF includes:

• Lower tax rate as your super fund is taxed at a rate substantially lower than most people’s tax rates.
• Discounted capital gains tax if the property is sold during accumulation stage. (

When you purchase and hold a property within your super fund, than upon retirement the fund sells the property and pay you benefits. And the advantage lies here with the fact that the transaction is exempted from capital gains tax, as aforementioned. In addition, any income received by the fund such as rent while you are taking out a pension is tax free. Also, before you retire and start receiving the benefits, any rental income from the property is tax at a rate of 15% or less. And, if the property is sold after a holding period of at least one year, the fund will only be liable to pay capital gains tax up to 10%. The super fund can enable you and the follow members to pull your fund and purchase a property, one that is unaffordable individually.

Asset Protections

The assets that are held in the self-managed superannuation fund, such as property, are usually protected from creditors in case of a bankruptcy. However, consider the following factors before deciding to invest in the property with your SMSF:

Investment: Property investment must compliment your investment strategy.

Diversification:Property is associated with a significant value and can possibly reduce the diversification of your investments, depending on fund’s other investment and their category.

Liquidity: Property is an asset that cannot be disposed of quickly, if needed. You should determine if your funds are adequately liquid and can pay expenses and benefits at short notice without a sale of the property.

Benefits for Business Owners

If you buy your business sites with your self- managed super fund and lease it to your business, the rent paid to the fund is generally tax deductible to your business. Considering the relatively low concessional contribution limit, rent paid to your fund can be an effective and helpful way to fast-track your savings without surpassing the contribution limits.

Buying an Investment Property

The aforementioned benefits of investing in a property through your super fund appear promising and extremely useful. However, before your final decision ensures that a property is a good investment, will it value increase over time, what are the risks associated and what will it yield. You can consult an independent third party to evaluate the opportunity for you to ensure that your self-managed super fund is used for the best possible investment decision.learn more here!

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