Segue News

These are just two of many benefits enjoyed when you buy your investment property in an Self Managed Superannuation Fund.

With changes to the rules regarding borrowing to invest within super, investing in property in a Self Managed Super Fund has become a whole lot more achievable, and attractive.

For those with an eye for property, owning an investment property in a Self Managed Super Fund rather than in your personal name can deliver you significant tax benefits. If structured correctly, you could potentially sell a property after you retire and have no capital gains tax to pay. Compare this to owning in your own name and paying tax at your marginal tax rate, and it is easy to see just how great the potential tax savings are.

It can also be a great way to boost the value of your retirement savings over time by getting around restrictions on how much you can contribute to superannuation each year. As always, just how much of a boost this gives your retirement savings depends on the quality of the asset and its potential for long term capital growth.

It is, however, important that investors consider more than just boosting their super balance and the potential tax savings when entering into a gearing arrangement within a Self Managed Super Fund to purchase property. There are many traps that need to be avoided and this is why it is essential to receive professional advice from a firm such as Segue before entering into any arrangements.

Some traps include:

• Does your SMSF Trust Deed allow for the fund to borrow (if the deed was drawn up pre 2007 then this is unlikely)?
• Will your SMSF have the capacity to make regular loan payments, in addition to any other payments (such as pensions and outgoings) that it is required to make?
• Does a geared property investment fit within your SMSF’s investment strategy?
• Will your SMSF have sufficient diversification across different asset classes following a property purchase?
• Is the property able to be purchased by the SMSF (note there are strict rules as to the types of property able to be purchased, who they are tenanted to and importantly what can be done to the property once the SMSF has purchased it)?

In addition to the above, it is critical that the purchase is handled in the correct way from the beginning; ensuring the ownership structure is in accordance with the rules, ensuring all payments are made from the correct source and ensuring the property is registered in the correct name. Any false moves can erode all of the benefits, and is why it is imperative to enlist the help of professionals who have knowledge in this area.

If you, your family, or friends, would like to know more about the benefits that investing in property in a Self Managed Super fund can provide please call Jess on
9509 1599 to arrange an obligation free meeting.