3. Potentially save on tax
SMSFs can use negative gearing to claim a deduction for borrowing expenses, just like individuals. And investing through
an SMSF can have other tax advantages as well. Rental income paid to your SMSF is generally taxed at just 15%. And
if you commence a retirement phase pension in your SMSF, then the rent you receive is tax free. More importantly
after commencing a retirement phase pension in your SMSF, any capital gain when you sell the Property is also tax
Tips and tricks to bear in mind!
While investing in property through your SMSF can be an attractive strategy, there are a range of rules you need to observe,
plus some pitfalls for the unwary. Here are some of the most important.
1. Check your investment strategy.
Like any other investment decision, your property purchase needs to conform to your SMSF's written investment strategy.
2. Use a non-recourse loan.
SMSFs can only use a limited recourse loan, when purchasing a Property. So if something goes wrong and the fund defaults,
its other assets aren't at risk.
3. Remember the sole purpose test.
Your investment must be for the sole purpose of saving for retirement - which means you can't use your super to pay off
your own home or buy a holiday home, for example.
4. Avoid related party transactions.
It's also against the law to buy, sell or rent a residential property to or from a fund member, trustee or a relative. That
means you can't transfer a residential property you already own into your SMSF, for example. The rules for commercial
property are slightly different, with business owners often choosing to buy premises through an SMSF, then rent them
back to the business at commercial rates.
If you're interested in investing in property through an SMSF, ESUPERFUND helps makes it easy, with a fast, streamlined process.
And if you act now, ESUPERFUND is offering a
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Before you start
An SMSF can be a great vehicle to take back control of your Super but an SMSF may not be right for everyone. We have conveniently
summarised other factors to consider when contemplating setting up an SMSF
here. We also assist you in understanding what is involved in the ongoing management of your SMSF via our Free
SMSF Learning Centre
If you want to learn more about SMSFs, download an