- March 28, 2017
- Accounting Help, Budgeting, Business Advice, Business Development, Cash flow, Money Saving, Professional Development, Self Managed Super Funds, Superannuation, Tax Planning, Tax Saving
Property is the most trusted asset class for Australians, yet only around 3.5% of all SMSF investment is in residential property.
Property investment can produce a range of tax benefits, for e.g. your tax can be significantly reduced or eliminated for rental income and capital gains, and the rental return can be used for loan repayments.
Do you need an SMSF to buy property through your super?
You do, that is if you want to choose which property you invest in anyway. Contact Stafford Accounting TODAY for a free SMSF consult.
Are you in business?
Business owners can get some significant benefits when buying their commercial premises through their super. Along with all of the tax benefits mentioned above you also avoid the tenant or landlord issues that are often associated with commercial property. This is great, as buying your own business property still satisfies the ‘sole purpose’ test which is discussed under ‘what are the rules’ that follows.
Can you borrow money when buying property through super?
You CAN. Often banks will lend up to 80% for a residential property and 70% for commercial property loans through your SMSF. This is an example of leveraging the bank’s money to increase your investment.
What are the rules?
There are significant and strict rules around property investing through your super, according to moneysmart.gov.au the property must comply with these 4 key rules:
- The property must pass the ‘sole purpose test’ – contact Stafford Accounting to see if this can apply to you
- You cannot buy or acquire the property from a family member
- Neither you or your family members can live in the property
- Neither you or your family members rent the property. Basically, it’s off limits to you and your family members. It is an investment property for your SMSF only.
Tips and Traps
Like any major financial decision jumping in means that you take on more responsibility however, there are major tax benefits available which can assist your decision. These can be utilised efficiently provided you seek the advice of qualified professionals such as the team at Stafford Accounting.
The bottom line
There can be some MASSIVE benefits of buying investment property through your SMSF, by borrowing money you are increasing your investment which can yield great results over time. There are also options to secure your loan to protect your other assets in the fund. These investment and asset protection strategies are things you really should spend time researching and talking through with your adviser. We specialise in SMSFs and would LOVE to talk to you about your options.