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Using your SMSF (Self-Managed Super Fund) to purchase property can be an enormously effective strategy, in terms of building your retirement savings. The long-term benefits are proven, and also have the benefit of being considerable in their scope. However, what you are ultimately doing involves a great deal of careful consideration. A misstep can be disastrous.
Thankfully, there are proven strategies to buy a property with your SMSF. To begin with, you will need to understand the rules concerning what can and can’t be done with a Self-Managed Super Fund.
Over the past few years, the number of SMSFs has grown to a considerable degree. More and more people are looking to see if this will have the capital they need to take advantage of an investment property opportunity. With the cash in your Self-Managed Super Fund, you can theoretically purchase an investment property opportunity outright, creating a rental income stream that you will be able to put into your fund. This can occur during not only the years leading up to your retirement, but after you have actually retired, as well.
Here are some simple tips to keep in mind, if you are beginning to strongly consider the possibility of using your SMSF to purchase an investment property:
This seems like commonsense, but a lot of people assume the money will be there, and start looking into investment properties straight away. Before you start any sort of work in this arena, make sure you are going to have the funds that will allow you to make the purchase in the first place.
Before you even get the ball rolling on finding your ideal investment property, make sure you establish your strategy first. For example, you can choose to gain income through the rent paid on your property, or you can cash in the long-term capital gains after selling.
Keep in mind that your SMSF gives you the ability to deal with both commercial and residential properties. There are benefits and challenges to each path, so do your research, and make sure you fully understand the commitment you will make.
Your capital gains and rental incomes are usually taxed at a low 15 percent rate.
While you have certain limitations with your property, you can use these funds to buy the business premises exclusively.
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