Many Australians are beginning to embrace the real estate market as more people look into investing in property through a SMSF home loan. There are a wide range of benefits to undertaking this type of investment – ranging from ease of access to tax deductions and more.
How can you use your SMSF for property?
Rather than paying your super contributions into a traditional avenue, nowadays it’s possible to take control of this fund yourself and invest in other things – including property. This can be a great way to begin your property portfolio, as all expenses associated with the real estate are paid directly from your SMSF, which means you aren’t out of pocket in the same way as a normal investment plan.
You can apply for home loans using your SMSF fund as well, allowing you to borrow money towards establishing your portfolio. There are some limitations to keep in mind when buying SMSF property, however. For example, none of the SMSF members may occupy the property, as well as any of their family members or close acquaintances. This is to avoid any fraudulent complications that could arise in the future.
Tax benefits of SMSF
If you sell your property during the accumulation phase of your fund, you’ll be liable to pay tax on any earnings made form the property. More specifically, if you sell the property within 12 months of purchasing it, the profits will be taxed at 15 per cent. However, if the property has been held longer than 12 months, this rate drops down to 10 per cent.
However, during the pension phase of your SMSF, both these tax charges drop to 0 per cent. This could be something worth keeping in mind when saving towards your retirement in the future.