Property through Super - Using Your Super Fund To Buy Property
Property through Super - Using Your Super Fund To Buy Property
Property can help diversify your investment portfolio, with varying outcomes over time, depending on what type of property you invest in. It is therefore important to understand the types of property investment and the role within your overall financial plan. Our Newcastle financial planners can support with all of the key elements of investing to help you achieve your financial, retirement & lifestyle goals.
Property through Super - Using Your Super Fund To Buy Property, Is This The Right Strategy For You?
There are now approximately 1.1 million Australians that are invested in a Self-Managed Super Fund (SMSF). Members around the country are leveraging from the benefits available through SMSFs. While a SMSF may not be suitable for everyone, many Australians have discovered that investing in direct property within their SMSF can offer substantial savings through tax advantages and access to a larger pool of funds.
The Benefits Using Your Super to Buy Property
Tax Savings – By using your super fund to buy an investment property, the property income will only be taxed at a maximum rate of 15% and the capital gains tax is reduced to 0% when you sell the property in pension phase.
Deposit – Utilise your existing super balance to fund the deposit for the property
Leverage – You can borrow up to 70% of the value of the property within your superannuation (however there are strict lending criterias at present with banks)
How To Use Your Super Fund To Buy Property
You will need a specialist to set up a Self-Managed Superannuation Fund for you. Once your Self-Managed Super Fund is established you can utilise your existing superannuation balance as a deposit into direct property. As of 2020 you can even borrow through your super.
Example of Financial Benefit
Matt & Bec are married, in their early 30s, earning with a combined income of $200,000 and combined super balance of $300,000. They would like to purchase an investment property and initially were going to purchase the property outside of their super until they learnt the financial benefits of purchasing the property inside of their super fund. See table below:
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