Australians know that the benefits in not only establishing their own Self-Managed Super Fund (SMSF) but also in using their SMSF to invest in property. The obvious benefit to this option is that you can use your super to a higher advantage to set yourself up for retirement. Where with traditional super funds you remain unengaged and let a third party manage your investments, having an SMSF enables you to engage with your super funds actively, invest your money, and control the future of your retirement funds.
SMSFs can be used to buy property with borrowed funds. If you have 1/3 of the total property cost, you can deposit that amount and use it to leverage the remainder from a trusted bank or lender. At a time when the share market is highly volatile, using superannuation to buy property is a welcome option. The property presents a much more secure opportunity to create a stable and earlier retirement for yourself. A property is also a more attractive investment option for lenders because it does not have a value that fluctuates as much as the share market, and because property simply gears better. If you’re one of the many who believes that property will be your super, you will benefit more from using superannuation to buy property. Using superannuation to buy property means you will only pay 15% of tax rather than up to 46.5% of the tax you pay outside of super.
You can experience the joy of a stable, early retirement by using your SMSF to purchase either commercial or residential property, with different rules applying to each. You incur no out-of-pocket expenses for holding the property, and any shortfall is paid for by your SMSF. SMSFs have become increasingly popular with people who want to control their retirement money; it gives you the power to have control over your financial future through self-funded means.
It is also important to remember that even though using superannuation to buy property through your SMSF is a viable retirement option; there are always pitfalls and risks that come with investing in your super funds in any capacity. You should always seek advice from an SMSF Accountant to know which strategy will best work for you according to your needs and what you want to achieve. An SMSF accountant will advise you how you can invest in to give the highest and safest return.
An SMSF is a responsibility that should be adopted by those dedicated to following SMSF guidelines and those that have the time and knowledge to do so. Executed well, using superannuation to buy property can pave the way for the comfortable, early retirement you’ve always wanted but was never possible until now. To get touch with an SMSF accountant, click the following link.