Australians love to invest in properties in order to diversify their portfolio. Nowadays, it is a common practice to indulge in property investment with the self managed super fund (SMSF). Let’s find out what the super is and how you can use it for property investment.
What is SMSF?
SMSF is a joint superannuation fund established by one to four individuals in order to get retirement benefits to the member. The reason why people love to use SMSF for property investment is the same financial perks and concessions as that of other super funds. The trustees and members of this fund are the same so the investors have complete control over the investment decisions.
Properties You Can Buy with SMSF and Conditions Applied
You can buy both commercial building and residential homes with SMSF. However, there are conditions imposed, which will have an impact on the utilization of the purchase. For instance, not even a single member of the super fund can occupy the house/building. Also, the property cannot function as a holiday home for the owners. The sole purpose of property purchase is investment.
Buying Properties with Super Fund
When you are buying properties with the super fund, you need to consider the option of borrowing. Sometimes, the properties being bought with the SMSF have higher fees associated with them. Banks grant loans up till 80 percent of the worth of the property being bought with the SMSF. However, it depends on per case basis. The property investors will have to manage and maintain the property with the SMSF only.
The real key for property investment with SMSF is to discover a property that has the capacity to give high rental yield and contribute toward capital growth on annual basis. The beachfront locations of Adelaide are one of the hotspots for property investment with SMSF. Since the investors cannot live in the SMSF bought properties, the investors should only examine a property for investment purposes.
The Advantages of SMSF Property Investment
You may be wondering about the reason for the popular trend of buying properties with the SMSF. Well, the most obvious advantage is the tax benefits. The annual tax rate imposed on the capital gains and the rental yields before the retirement is just 15 percent. But, as mentioned earlier the members cannot live in such properties. A self explanatory advantage of SMSF procured properties is that the resources of more than one family member can be used.
One of the most attractive features of SMSF procured properties is that they can be held even after retirement. And if you sell this property after retirement, you do not have to pay the capital gains tax. Furthermore, if you still have the property in your possession after retirement, you also do not have the tax on the rental yield.
Even though you have to run the SMSF bought properties yourself, you can hire property managers to look after the establishment in order to ascertain that you are in compliance with the regulations. My Property House provides property analysis services for investment purposes and the services extend towards managing the properties so that the investors can enjoy maximum gains with least amount of efforts on their parts.
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