You can purchase an investment property through your SMSF. AUSTWIDE Invest can help you through our vast network of professionals from start of setting up your SMSF to the end of purchasing your property.
Owning a property within your fund can be much more tax effective than investing in your own name. For example, once your SMSF has held the property for more than 12 months, capital gains made on its sale will be taxed at a maximum rate of 10% (and 0% if the fund is in the pension phase).
In addition the rental income from the property is taxed at a maximum rate of only 15% (which also drops to 0% in the pension phase). If the property was in your own name the rental income would be taxed at your marginal rate which can be up to 46.5%.
Many experts believe that setting up a SMSF is one of the most tax effective and efficient ways of saving for your retirement. One way of doing so is to use your SMSF as a vehicle with which to buy property. This may, at first glance, sound like a complex and risky option but it could also be one of the smartest financial moves that you will ever make – if it is properly set up and managed!
If you have sufficient funds in your Self-Managed Super Fund and want to use this to make a deposit for a property, you could be eligible for a SMSF Loan. Superannuation laws prevent SMSFs from borrowing using typical property loans because by doing so they would potentially jeopardise all of the assets of the SMSF to make a deposit for a property, you could be eligible for a SMSF Loan.
To make sure that adequate security is provided while complying with superannuation laws, the SMSF needs to set up and hold 100% of a holding trust, for the sole purpose of owning the security property on the SMSF’s behalf. The holding trust becomes the owner of the security property and the SMSF is the borrower.