Workshops: Buying Rental Properties within Super

Recent changes to superannuation legislation have made owning a residential rental property or commercial property within your superannuation much easier.  We are very aware that some people prefer to invest in property and they would really love to be able to do this with their superannuation – well now you can.  If done right, a husband and wife can combine their super balances and buy a rental property.  For business owners this also means that you may now be able to use your superannuation to purchase your business premises.

What’s that, you don’t have enough within your super to buy your business property or a residential rental property – well it’s not the end of the world.  You can now borrowing within super to fund these purchases.  Yes there are strict rules in place, however they are not unrealistic.

The unique advantages available when buying property within super provide an excellent opportunity to increase returns and grow your retirement income via direct property exposure.

Key benefits to borrowing through your Self Managed Superannuation Fund (SMSF):

• SMSF borrowing strategies are a tax-effective way to buy property.
• Borrowing to invest in property provides the potential to utilise traditional negative gearing strategies to generate tax-effective income for the SMSF (in some circumstances the income will be tax free).
• Holding property in a SMSF may also allow you to defer any capital gains until retirement, at which stage they can become tax free (that’s right, potentially no capital gains tax).
• Allowing your SMSF to own the property provides greater security and control for your business’ future needs.
• SMSF mortgages let you diversify the assets in your SMSF. The ability to borrow to buy property provides the opportunity to diversify your overall SMSF portfolio by including direct property which previously has been difficult to access, without significant capital.

In other words, more can be achieved with SMSF borrowing, in terms of leveraging into ‘larger’ real property assets.

Although Superannuation legislation was first amended nearly three years ago to allow borrowing by super funds (in certain circumstances), the uptake of this has really only begun to grow noticeably in the last year.  This is mainly because the major banks are becoming more comfortable with lending to these arrangements. The rules are stringent and it is always important to have up-to-date advice regarding any existing or proposed borrowing arrangements within a super fund.

To help clients consider their options, we will be holding small advice sessions within our offices.  These will be limited to 10-12 people so that all questions can be answered thoroughly.  If you are interested, please contact Rebecca on Ph 3284 7752 to book your place.