A growing number of investors are turning to Self-Managed Superannuation Funds (SMSFs) to take control of their future nest egg.
According to the Australian Taxation Office, SMSFs account for almost $439 million of the $1.3 trillion in Australian super funds, with more than 478,000 funds in operation at June 2012 and the number growing at more than 6 per cent a year.
The growing shift towards SMSFs follows a loss of confidence in the performance of Australian super funds, in recent years considered among the worst performing in the world.
Now many Australian investors are turning to the security of bricks and mortar due to its relative stability compared to other assets.
Recently revised super rules made it easier for Australians to invest in property using their superannuation. SMSFs provide improved taxation rates for voluntary contributions, asset protection in the instance that the fund holder declares bankruptcy and, of course, no capital gains tax as well as tax-free income once the trustee begins accessing their pension.
This means an eligible SMSF may buy a property today for $400,000, hold it for several years, while it grows in value, and sell it after the member reaches 60 years of age, without paying capital gains tax.
These days property investment is complex, as it offers a range of choices including off-the-plan, high-rise CBD, apartments, student accommodation, serviced apartments and foreign property, all of which are subject to individual risks and benefits.
Ensure you select a property with the right profile for strong capital growth in the future. Properties of this kind are typically underpinned by location, scarcity in the type and number of similar properties and have a track record of stable performance.
If in doubt about establishing an SMSF or selecting an investment quality property, consult an independent professional advisor and find out how they can help you take control of your financial future.
(Greville Pabst, November 24 2012, Herald Sun – Real Estate)
Call Lynne on 1300 2 SOLID to organise an appointment to discuss how you can make your SMSF work for you.