The introduction of the super scheme has helped Australians to set aside funds and buy properties giving you various tax benefits and the ability to control your funds. However, when using super to buy property, there are multiple regulations that you need to meet, but the benefits are also significant.
Benefits of Super Property Investment
Some of the positive benefits of buying property through the super scheme include
- It’s a low risk and stable investment when compared to other options in the market and when well executed it offers considerable returns.
- It gives the power to diversify your property investment portfolio
- A positively geared property may generate you an extra revenue stream.
- It allows you control the best property investment and the revenue unlike other alternatives like shares that are affected by market forces and fluctuations.
- The members of SMSF enjoy significant gain access to tax efficiencies that includes:
- Protection of properties against bankruptcy proceedings and general debt recovery
- Reduction of disposal of property taxation from 46.5% to 15%
- On retirement, there is no capital gain tax
- The employer superannuation contributions may be used to settle any loans associated with the super property investment
Risks related to super property investment
Some of the risks associated with its investment include:
- The investment is not as liquid as investing in shares
- The costs that are involved in buying and selling of properties like stamp duty is mandatory
- The property may stay vacant for an extended period
- It requires your attention, management factors, and ongoing expenses
Property Consideration and Rules
Before making your property investment using super scheme, you need to consider the following regulations
It’s not possible to buy properties internationally utilizing the system however you can invest in any part of Australia, this also makes it easy when filing your tax returns and getting exemptions
Type of property
Some restrictions are associated with the kinds of property, how it’s used and its location. SMSF buys property that includes commercial, residential, vacant land, retail and industrial.
The properties bought under SMSF are strictly investment only. The super scheme cannot buy for your holiday or family home, and you cannot also live in a property purchased through and owned by your SMSF. The only tenants allowed in the house are third-party with no relations with you.
Buy an investment property using super property investment and enjoy long-term returns.