Australians love to combine their need to fund their retirement with their love for property. If you have a Self Managed Super Fund (SMSF), residential and commercial property are quickly becoming the fastest growing investment assets within this structure.

The biggest driver has been the amendment to the Borrowing Provisions in the Superannuation Industry (Supervision) Act (SIS Act).  Spurred on by sharemarket losses during the Global Financial Crisis and Australia’s continuing love for property ownership, many SMSF owners have taken out loans to buy an investment property through their SMSF.  Prior to the change in the SIS Act borrowing provisions, super funds could not borrow money.

The best tax structure

Control and tax savings are the most popular reasons for owning residential or commercial property, as opposed to entrusting your funds to a fund manager who will invest it in shares and manage funds.

Another good reason is SMSF members who own an investment property will be exempt from paying capital gains tax if they sell the investment, once their super goes into pension phase.  They will also be exempt from paying income tax on any rental income in pension phase.

In addition, SMSF members will be taxed at 15% for any capital gain or rental income generated by your fund, or 10% capital gains tax if you’ve held the property for more than a year.

How do I get started?

Talk to your financial planner if you feel this is the right investment strategy for you.  If you have already established a SMSF, your advisor can help source the right property to best suit your investment strategy, and assist you with sourcing a suitable loan once you have found your investment property.

If you are interested in establishing a SMSF for the first time, speak with your financial planner who can outline the initial set up costs and borrowing requirements prior to set up.

Quinn Financial Planning has the expertise to help you build your wealth.  For more advice on investing in residential or commercial property, contact Peter Quinn here at Quinns by submitting an online enquiry or calling us on +612 9580 9166 to book an appointment.