Buying Property Through Your Self Managed Super Fund
Introduction: What is a Self Managed Super Fund?
Self-managed superannuation funds (SMSFs) are funds that are entirely self-managed. The fund’s trustees decide the strategy for managing the fund’s investments, and this strategy may be different than what is offered by other superannuation funds.
A self-managed superannuation fund can be set up by an individual to hold their personal retirement savings or by a group of individuals who want to invest together. Setting up a SMSF is not easy, but there are professionals who can help with the process. There are also software packages that offer assistance in setting up and managing SMSFs.
The SMSF is a type of fund that has been created to provide retirement savings for those who do not have an employer sponsored superannuation scheme.
SMSF property Loans are still regulated by the Australian Taxation Office (ATO) but they are self-managed. It means that you as the employer do not need to employ a financial adviser or accountant to run the SMSF. You will, however, need to make sure that you comply with strict compliance and reporting obligations.
How to Set Up a Self Managed Super Fund
When you set up a self managed super fund for the first time, it’s important to get a lot of information about what you need. This is to make sure that your fund is set up in the best way possible.
The first step when setting up your self managed super fund is to find an accountant or solicitor who can help you. They will be able to put you in touch with good professionals, such as financial planners and insurance brokers, who can also help you when setting up your fund.
Setting up a self managed super fund can be daunting at first glance but it doesn’t have to be complicated if the process is done the right way from start to finish.
Buying property with your SMSF
Along with the rapid growth of the SMSF sector, more and more people are considering property investment as an option to diversify their portfolio.
If you are considering investing in property through your SMSF, there are a number of benefits that you should be aware of.
The first is that it’s easier to get a loan for a property, because banks see it as an investment and not just a personal purchase. Second, you can use your super fund to pay off the mortgage. which means you don’t have to work until retirement to repay the debt.
The third benefit is that by owning the property through your super fund, you avoid capital gains tax on any future sale.
For example, if you buy $500K worth of property now and sell it in 10 years time, if you own it personally then $125K will go towards capital gains tax. Because that income will be taxed at your personal marginal rate plus 10%.