Considerations of property investment within a SMSF

Relying on your super alone for a comfortable retirement might not be enough, especially if you’re planning on retiring early or still supporting a family. That’s why making investment decisions sooner rather than later in life can make a massive difference to your overall circumstances in retirement! And using a Self-Managed Superannuation Fund (SMSF) to build wealth effectively is something that many Australians are yet to fully leverage.

What is a Self-Managed Superannuation Fund?

A Self-Managed Super Fund is a private superannuation fund you can control and manage on your own, although often with the assistance of a financial planner to set up and sort out the legal requirements. Ultimately, a SMSF provides you with power, flexibility, control and choice as to how your retirement funds are invested. 

What are the benefits of setting up a SMSF?

One of the biggest benefits of establishing a Self-Managed Super Fund is that you can invest in property…something you can’t do with stock standard retail funds. Additional bonuses of investing in property through an SMSF include:  

  • Discounted – or even zero – capital gains tax on your property
  • Accelerate your retirement savings – superannuation contributions are taxed at just 15 per cent
  • Tax benefits – investment earnings are taxed at just 15 per cent in super  
  • And it bears repeating – clients who have a passion for property can invest in their favoured asset class using their super…retail super funds can’t invest in property!

What do you need to get started in property investment with super?

The bottom line is that a SMSF requires time and money. At the time of writing a minimum balance of $200,000 in your fund is necessary – this is likely to increase, so it pays to seek out advice sooner rather than later if this strategy is one you’re passionate about pursuing.

What are the limitations of investing using super?

Property investment using a SMSF does have some strict decrees (which is why it pays to seek professional advice). One characteristic that differentiates a SMSF from other funds is that you (and any other members of the fund) are also its trustees…and the investment must be strictly commercial and cannot directly benefit yourself or related parties pre-retirement. So while you’re free to lease the property out to unrelated third parties, renting out the property to family or using it as a personal holiday residence is a law infringement. 

Hefty fines can also be incurred for breaching Australian Tax Office (ATO) rules when it comes to considerations like outsourcing SMSF management. It pays to invest in understanding current regulations to prevent unexpected penalty charges!

Get in touch with One Haven to get started investing in property using your super

Growing a property portfolio using your super is a tangible and meaningful way to secure your financial future, driving retirement wealth and giving you greater control over exactly how and where your money is invested. It can seem complicated, but One Haven has great relationships with financial planners who have the specialised knowledge needed to guide you efficiently through the process of property investment via a SMSF. 

Get in touch with One Haven so we can put you in touch with our trusted partners!

Contact us today to explore your options.