Data from theDigital Finance Analytics (DFA) Household Survey has shed some light onAustralians’ feelings regarding property investment in self managed super funds(SMSFs).
According toDFA, the survey showed that approximately 3 per cent of households were holdingresidential property in an SMSF, while another 3 per cent were activelyconsidering it.
Of thisnumber, 28 per cent were attracted by the prospect of rising property prices,while 17 per cent were interested in favourable SMSF loans.
However, thehighest percentage (29 per cent) of survey respondents were motivated by thetax benefits provided.
It’s nosecret that property ownership boasts a number of attractive tax advantages.For instance, homeowners can claim an immediate deduction toward advertisingfor tenants, home insurance, loan interest and utilities like electricity, gasand water if the owner pays for them.
Owners canalso claim expenses over a number of years, such as those incurred throughmortgage borrowing and capital works like extensions, alterations andstructural improvements.
Buyingproperty through an SMSF can add to these benefits, allowing buyers to claiminterest expense as a deduction by the SMSF and potentially reduce the fund’stax liability.
Otherbenefits of SMSF loans
SMSF loansprovide many other advantages besides tax breaks. For instance, an SMSF canacquire property worth more than its available funds by using gearing.Additionally, SMSF assets are secure in the event of a default, meaning membershave a reduced chance of losing their other assets if a property investmentdoes not work out.
SMSFs alsoreceive all income and capital growth from a property even if it has not beenpaid off. SMSFs can also use income gained from the property to help pay offthe loan.
