Purchasing residential property within your self-managed super fund can be an effective way to increase the value of your retirement savings and provide tax effective investment returns. Owning a residential investment property within your self-managed super fund can be significantly more tax effective than investing in a property in your personal name.
There are many areas that need to be considered when buying property through a self-managed super fund and you must ensure you are complying with the regulations. We can provide you with a number of qualified professionals that can handle all areas of establishing and maintaining your self-managed super fund while our expert Buyer’s Agents secure you a great investment property.
Some of the requirements of the property are:
- The property must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members.
- It must not be acquired from a related party of a member.
- The property must not be lived in by a fund member or any fund members’ related parties.
- And finally the property must not be rented by a fund member or any fund members’ related parties.
The major benefit to owning property within your self-managed super fund is the tax advantages you receive. The maximum rate of tax your self-managed super fund will pay on the rental income is 15%. And if your self-managed super fund is in the pension phase, this rate reduces to 0%. When comparing this to a property held personally where the rental income is taxed at your marginal tax rate, this can offer significant tax savings, especially if your tax rate is as high as 46.5%.
Another advantage is that if your self-managed super fund holds the property for more than 12 months, any capital gain made on the sale of the investment property will be taxed at a maximum rate of 10%, or again, 0% if the self-managed super fund is in pension phase. If you want to take more control of your retirement savings and purchase residential and commercial property using your superannuation funds contact us now.