Property Thru Super For Investors

Investing In Property Through Your Super, Is This The Strategy For You?

There are now approximately one million Australians that are invested in a Self-Managed Super (SMSF) Fund. Members around the country are leveraging from the benefits available through SMSFs. While a SMSF may not be suitable for everyone, many Australians have discovered that investing in direct property within their SMSF can offer substantial savings through tax advantages and access to a larger pool of funds.

The Benefits of Purchasing Direct Property Through Your Super

  • Tax Savings – By using your super to purchase an investment property, the property income will only be charged a maximum tax rate of 15% and capital gains tax is reduced to 0% when you sell the property in pension phase
  • Deposit – Utilise your existing super balance to fund the deposit for the property
  • Leverage – You can borrow up to 80% of the value of the property

How it Works
Through a Self Managed Superannuation Fund (SMSF) you can utilise your existing superannuation (super) balance as a deposit into direct property and as of 2007 you can even borrow through your super.

Example of Financial Benefit
Husband and wife in their early 40’s earning combined income of $200,000 and $200,000 in super*

PURCHASE DETAILSOUTSIDE SMSFINSIDE SMSF
Purchase Price (Investment Property)$400,000$400,000
Deposit (Price)$120,000$120,000
Total Income Needed To Fund Deposit (Factoring In Income Tax)$190,476$141,176
Loan (15 Years)$280,000$280,000
Total Loan Repayments (15 Years At 6% Interest Rate)$ 425,340$ 425,340
Total Income Required To Meet Loan Repayments (Factoring In Income Tax)$675,143$500,400
Total Cost$865,619$641,576
Total Cost Difference+$224,043
Property Value (15 Years At 5% p.a.)$831,571$831,571
Total CGT Difference$104,760$0
Total Potential Financial Benefit (if property is sold in pension phase after age 60)+$328,803

To learn more and find out whether this is the right strategy for you, simply contact us about our complimentary obligation free appointment.

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*Please note that these are rounded and example numbers, not exact figures. Personal, market and legislative factors and changes will have an effect on your outcome. It is recommended you seek personal specific advice for your situation.

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