Self Managed Super Funds (SMSF)
Superannuation funds can now borrow money to purchase real estate. An investor can have just as much choice and control over investment property whilst using superannuation funds as they would by investing outside superannuation.
Many Australians have significant money invested in superannuation, and more and more are establishing their own SMSF. Many people would like to be able to include leveraged real estate in their superannuation investment portfolio.
Until recently, this has not been possible because of restrictions on superannuation funds borrowing and changing their assets. The Superannuation Industry Supervision Act (SIS Act) was amended in September 2007 to allow Super Funds to borrow and charge their assets so long as a special structure is used.
SMSFs may choose to gear their real estate investments in order to diversify risk, increase the yield on the investment, and because many funds do not have sufficient money to purchase real estate outright.
It opens up some very tax efficient avenues towards maximising your retirement income. You should certainly consider this option if you:
- You would like the flexibility and control over your investment assets
- Are in stable employment and therefore in a position to make regular contributions to your super fund
- Have more than $170,000 in your fund
Reasons to consider buying property with your SMSF:
- It is an actual physical asset that you can drive past. You can see your super working for you.
- You will need a minimum of 30% deposit and any purchase costs.
- You are taxed at a minimal 15% on income (as opposed to up to 45% for you own income)
- If over 60 years old, you will pay No income Tax or Capital Gains Tax.
- You will have full control over your asset. You decide what to invest your Superannuation in.
- Your property is paid for by your employer and your tenant.
- You can combine the Super of up to 4 members.
If investing in property via your self-managed Super Fund is of interest to you, we will put you in touch with one of our alliance partners who specialise in using SMSFs for property investing.
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