Use your superannuation to buy real estate

Harry Kalligeros

Use your superannuation to buy real estate

By Harry Kalligeros | 11 December 2013

Be on your way to retiring richer than you ever thought possible by taking greater control of how your money is invested in your Self Managed Super Fund (SMSF).

Blogger: Harry Kalligeros, owner, Properties Invest 

Whether you’re planning for retirement or a new or seasoned property investor looking for a better way to create and protect your wealth; our Government has created an unprecedented opportunity for all Australians to dramatically grow their wealth.

When Superannuation legislation changed in 2007 it allowed SMSF investors to purchase property through leveraged funds which are called property bare trust or custodian trusts.  Never before have SMSF’s been more appealing and it shows in the high take up rate of Australians.

This is now a fantastic opportunity for all Australian’s with a view to bringing self funded early retirement closer by either using the power of leveraging to purchase property or by making a profit through rental income.

By taking advantage of minimal taxation structures in your SMSF and well developed research methods of real estate investment, you can enjoy the benefits and tax concessions available now and in the future.

Your existing superannuation fund is all you need to get started; you can pay off your investment property by using your employer’s super contributions and the rental income.  Couples and families can also combine their superannuation balances into their own SMSF creating a mega family SMSF.

There are two main benefits for SMSF’s; they only pay 10% Capital Gains Tax (CGT) if held for more than 12 months and no CGT if the Fund is in Pension Phase.

Secondly, you pay only 15% tax when contributing (up to $25,000 pa) to pay off your debt on your property through your SMSF as apposed to your individual marginal tax rate.
Other benefits include:
o    Super Funds are taxed at 15%.

o    Deductible interest payments.

o    Direct property in Australia is a smart way of diversifying your investment portfolio.

o    The ability to invest in NRAS property using a SMSF and your super fund receiving the incentive.

o    Individuals do not get into debt and the deposit is obtained from the current superannuation fund.

o    The ability for the SMSF to end the bare trust and take ownership of the property at any time.

o    The SMSF’s other assets are protected from risk.

o    You can include the family insurance policies and take advantage of estate planning benefits.

As outlined above, the new borrowing rules have arguably favoured investment in property, in turn placing residential property in top of mind for SMSF investors.

However as before, choosing the right SMSF investment strategy and property remains the inevitable challenge.  High yield investments within the superannuation structure can take advantage of the low flat tax rate and the tax free environment in retirement.

Use your superannuation to buy real estate
Harry Kalligeros
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