Are you looking at your Industry Super Fund returns and wish it could have been better? If you are looking for ways to leverage the consistently poor or negative gains on your current portfolio, then a super property would be the right option for you.
Owning a property has always been one of the best ways to secure a sufficient retirement income. And the best part is you can borrow in your SMSF to fund the purchase. Gone are the days when you have to go through the costly and rigorous process that is usually associated with property buying.
How it works
Most banks are willing to help you take a loan on your SMSF for up to 80% of the property value. Your SMSF will then appoint a security custodian to purchase an investment residential property as security for the loan. The Fund will then contribute cash to pay the deposit and to meet the legal costs and stamp duty. Also, your SMSF covers the interests, maintenance, insurance, rates, body corporate fees, property management and other expenses incurred during the investment process.
It will also manage the property in the same way as any other real estate investment. The property is held in trust and the legal title is either transferred to the SMSF when the loan has been repaid or the property is sold.
Benefits
* Tax minimisation – from 30%, you will only be paying 15% rental tax
* Capital growth – as the value of your property increases overtime
* Increase rental income
* Tax variations and negative gearing which are both beneficial to your cash flow
Also, if you are over 60 years old when the property is sold, you will not be obliges to pay the Capital Gains Tax.
Impact on your personal portfolio
Buying a property using your SMSF has a big impact on your overall portfolio. Thus it is extremely important to buy a property that does not cost more than what your SMSF is earning.
To really understand how you can use your SMSF to your advantage, talk to a professional who can enlighten you with both the benefits and risks of investing in a super property. You can find such legal advice at Super Investment Ideas, a certified member of the Financial ombudsman Service or FOS.