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05 February 2010

Buying property through Super!

If you manage or are thinking of setting up your own superannuation fund, you may be interested in investing in property, either commercial or residential. However you need to be aware of the fundamental rules first before spending your hard-earned retirement money because if you get it wrong, the tax penalties can be horrendous!

Here are some key tips for Self Managed Super Funds

What they
can’t do:

  1. They generally can’t borrow money to invest i.e. they can’t participate in the tax benefits of negative gearing;
  1. They can’t purchase residential property from member’s or associates of the fund;

What they can do:

  1. They can purchase “business real property” (generally commercial property) from member’s or associates of the fund.
  1. They can purchase any form of property (and other assets) from any-one other than a member or associate of the fund (i.e. the general public at large) provided the investment fits in with the Fund’s investment strategy.

More about Self Managed Super Funds

The benefits of holding property (and other investments) in your super fund as an investment are asset protection, lower tax rates on rental income, lower tax rates on capital gains if it is sold in the future and providing for a secure long-term investment.

You may also consider using your superannuation fund to acquire your future retirement property. So rather than waiting many years into the future, you could consider purchasing it now and when you retire, the superannuation fund transfers the property to you instead of cash. In the interim, it is recommended that the property be let to tenants at fair market value.

A self managed superannuation fund can have up-to 5 members so even if you personally don’t have enough super to invest, you could consider jointly investing with other family members or your business associates.

The options, and uses available to your superannuation fund are huge and the single greatest area of wealth creation and growth is superannuation. So don’t miss the opportunities, discuss how we can help you now.

(This blog has been provided by Team Accounting Solutions. It is general advice only and should not be relied upon without seeking independent advice).

To get competent advice about setting up your SMSF, contact Team Accounting Solutions:

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