With superannuation benefits fluctuating in recent years, more people are turning towards steadier ways to secure their future. Unlike invested money, bricks and mortar property is more likely to secure guaranteed returns. If your pension is large, you can use a superannuation property to create a retirement that is more secure.
What is a Superannuation Property?
With a self-managed superannuation fund, you can invest part of your pension and borrow money to purchase a property. Since 2007, Australian laws have allowed citizens to do this in order to maximise the benefits of their retirement fund. Typically, you can borrow 60-75% of a property’s value alongside an investment from your existing fund. Only the property you purchase can act as an asset to secure the loan, which means you and your Self-Managed Superannuation Fund (SMSF) trustees cannot use your existing properties to secure the deal. As this arrangement is slightly unusual, you do experience interest rates that are 1-2% higher. However, the tax benefits associated with this arrangement offset the higher interest. This means it is an arrangement that still works in your favour when it comes to retirement.
What Are the Benefits of Using SMSF Property Services?
Using SMSF property services comes with several benefits. First, houses are more likely to accumulate in value than standard financial investments. While they are not immune to economic downturns, they are far less likely to see the same catastrophic dips in value that market investments experience. This means you have assured security when you retire.
As an SMSF property service user, you can benefit from no capital gains tax if you sell the property after you begin drawing your pension. This means your property can accumulate in value and you can benefit from the gains, while avoiding heavy taxation.
When you reach the pension phase of your investment, you only have to pay 15% tax on any rental income you acquire. If you are purchasing a property to take part in the National Rent Affordability Scheme (NRAS), this allows you to make significant savings on your income.
Many people are deterred by SMSFs due to the apparent complexity of investment management. However, the assistance of an SMSF property service helps you maximise your investment without the associated management headaches. For those with limited legal and financial expertise, this is a good way to buy property with SMSF. As a result, you can combine the tax and financial benefits above with the security of a property investment, and look forward to a more affluent retirement.
