A Self Managed Super Fund (SMSF), as the name suggests, is you being directly responsible for the management of your own superannuation. And yes, exploded it has. Over the past four years the value of residential property that’s being held in SMSFs grew from $10.825 billion in June 2008 to $14.868 billion last March, according to ATO data.
Up until recent times, most of us have been turned off by the thought of having to look after our own superannuation accounts. And really, given the costs and effort involved, it has been the right choice for most of us to leave it to the institutions.
However, changes to the laws made to SMSFs with regard to geared investments in real estate have moved the playing field. While it’s taken a little while for investors to catch on, financial planners are increasingly reporting significant interest from their clients about how to buy an investment property, using their super.
So, why all the interest?
When looking at the opportunity here, there is much to offer.
For example, any capital gain on a property is taxed at no more than 10 per cent. And if your property is cash flow positive, the net income is charged at no more than 15 per cent.
On top of this, it is possible for super funds to borrow up to 70 per cent of the value of the property, and last year the ATO gave a ruling allowing for deductions on value improvements to SMSF properties.
Louis Christopher, Smart Property Investment, January 2013 issue
Call 1300-2-SOLID and organise a time to speak with our Financial Planner, Nick Stratus, about SMSFs