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8 must-read questions about Investing in property with Super

By eSuperfund

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Investing in property through a Self-Managed Super Fund (SMSF) can be a rewarding strategy - but it can also be confusing for newcomers, with plenty of complex rules to remember. To help you get started, we've put together answers to some of the most common questions new investors ask.

1. Can I use negative gearing through an SMSF? 

Yes, you can.

An SMSF can claim interest and borrowing expenses on an investment property in exactly the same way as an individual investor. So you can use negative gearing to help offset any tax on the fund's other income now, then benefit from any capital gains on the property in the future. But remember, when you buy a property through your SMSF, you can only claim deductions for the fund, not for yourself.

2. How much can I borrow? 

Banks will generally lend a little less to SMSFs than they might to an individual buyer, due to the extra risk that these loans carry given that they are non-recourse in nature. This means in the event that the SMSF defaults on the Loan the Lender can repossess or sell the Property only, but cannot repossess or sell any other SMSF asset to recoup any loan shortfall. While different banks have different limits, a typical lender might let you borrow up to 80% of the property's value if your SMSF trustee is a company, or up to 72% if the trustee is an individual.

3. Is it more expensive to buy property through super? 

Generally speaking, it costs about the same amount to buy inside and outside super. If you don't already have an SMSF, you will need to set one up, but that doesn't have to be expensive. For example, ESUPERFUND currently has a special offer for setting up an SMSF. Click here for details.

4. Is investing in property through an SMSF tax effective? 

Depending on your situation, buying property through an SMSF could offer significant tax benefits. Any rental income earned by your fund's investment property is usually taxed at only 15%. And if you commence a Pension in the Fund after your Preservation Age, tax on rental income is tax free. More importantly if you commence a Pension in the Fund after your Preservation Age, tax on any capital gain is also tax free on the sale of the property! Of course, tax laws are complex, so you may wish to talk to a tax adviser before you invest as in some cases it may be more beneficial to purchase the Property in your personal name.

5. Can I use my SMSF to buy a holiday house? 

No, you can't.

All of your SMSF investments must be for the sole purpose of saving for retirement, so you can't buy a property then use it for personal purposes. 

6. Can I use my SMSF to buy my business premises? 

Yes, you can.

This is a special exception, and has proved a great strategy for many business owners. By buying a business property through your SMSF, then renting it back to your business at market rates, you can use your business rental costs to build your super.

7. Can my SMSF buy an investment property from me or my spouse? 

No, you can't.

Your SMSF is not allowed to buy a residential property from a fund member or any person associated to a fund member such as a relative. So if you or another fund member already own a residential property, you can't transfer it into your SMSF.

8. Can I rent my SMSF residential property to a family member? 

No, you can't.

Again, this would contravene current Super Laws. That is you cannot rent residential property the SMSF owns to a fund member or any person associated to a fund member such as a relative.

 

For more information about SMSFs, download our free SMSF Guide to investing in Property eBook or Information Package today. If you're interested in investing in property through an SMSF, ESUPERFUND helps make it easy, with a fast, streamlined process. And if you act now, ESUPERFUND is offering a  Special Free Offer! Click here  for details.

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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      Son is able to write all types of residential and commercial property loans.

      In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.

      Hear from Son about: 

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      • Interest only loans and if that is the way to go
      • How the mortgage division supports the overall business of Rethink Investing
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      • How he wants to help clients take advantage of the current market
      • Why negative press can be good for investors
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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

" ["fulltext"]=> string(2483) "

In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
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  ["title"]=>
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Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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