Using your self-managed super fund (SMSF) to purchase a property portfolio is a popular investment strategy due to the level of control it permits. However, as per any investment decision, it pays to explore all the aspects to ensure it is the right decision for you.
While buying property through a SMSF is not a new concept, the rules have changed recently, meaning you can now also borrow money to supplement this purchase.
There are a number of mandatory rules you must comply with when buying your SMSF property:
A benefit of an SMSF property for small business owners is the option to purchase a property to use as your business premises, allowing rent to be paid back into your fund. Another key benefit is that earnings within a super fund are taxed at only 15% which is considerably less than the marginal tax rate most workers will incur, with the pension phase of the fund being tax free. In addition, capital gains tax varies according to the phase of the fund too, set at 10% for properties held for longer than 12 months.
While there are many benefits to a SMSF property strategy, it is important to understand the costs of setting up a fund to ensure it aligns with your retirement goals.
Loan Studio Financial Advisor, Brendon Honeyford, can take you through the SMSF option in comparison to your current superannuation scheme to ensure it aligns with your overall retirement goals and investment strategy.
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