SMSF Property Investment: a Great Way to Take the Future in Your Hands

Property investment

Self-managed super funds or SMSFs are one of the most popular retirement structures in Australia offering members greater control over their pension funds and the opportunity to manage their money according to their specific needs. One of the greatest advantages that comes with this super fund is the great flexibility of the investments. As a member, and at the same time trustee of the fund, you have different investment options. When you have property in your SMSF, your super can be taxed at a lower rate, plus the tax for the capital gains may be reduced as well. The self managed super fund’s property investment is a great way to build a smart and effective strategy that can help you boost your retirement savings.

There are a few essential things to keep in mind before you buy property through your super fund, whether it be commercial or residential. Before you start planning where you want to invest your money, you should first understand all the rules and laws regarding property investment. In this case it is best to seek professional help from experienced SMSF advisers that can help you carefully plan your investment strategy. There are some important things you should know before you begin with your self managed super funds property investment. Buying a residential property through your SMSF should be done with one purpose only and that is to contribute to your retirement’s wealth, which basically means that you can’t live in that property until then. When investing in a commercial property you are allowed to use it in most of the cases,as a location for your business, on the condition that you regularly pay the rent costs.

To invest in a certain type of property you can borrow funds to make your self managed super funds property investment happen. In this case it is essential to set up a bare trust deed which is a legal document that has the purpose to provide all the rules and arrangements which will ensure your super fund can successfully borrow the required finances from the bank. The trustee of the bare fund can be an individual member who doesn’t act as a trustee of the SMSF that will acquire the property. You can also establish a company that will have the role of a trustee. All the expenses for the property are paid by the super fund which will receive the rental profits. You have the obligation to pay the costs for the operating expenses and all the repayments for the loan as well. For each property you decide to invest in you will need a separate bare trust, which basically means that you can’t use the same trust for more than one investment.

You may also like...