Buying Property Using SuperAnnuation| Basic of Property Investment | Property Investment in Australia

September 15th, 2023

Purchasing an investment property using the funds in your superannuation account can be a savvy wealth creation strategy. With Australia’s strong property market and the tax incentives of super, using your retirement savings to invest in real estate can give your finances a healthy boost. In this comprehensive guide, we’ll walk through the basics of buying property with super.

Setting Up An SMSF For Property Investment

The first step is establishing a self-managed super fund (SMSF). This puts you in control of your super savings rather than relying on an industry or retail fund manager. Having an SMSF provides greater flexibility to invest in assets like property. Work with a financial advisor to set up the SMSF correctly.

Rolling Over Super To The SMSF

Once you have the SMSF structure in place, your existing super balance needs to be rolled over into it. This is done by contacting your current super fund and requesting they transfer the funds. The amount rolled over will become the capital within your SMSF that can be used for investments.

Using SMSF Funds For The Deposit

A common question is whether you need to pay the deposit on the investment property from your own personal savings. Generally, the answer is no. For SMSF purchases, we negotiate with developers to allow the deposit to be paid from the super funds once rolled over. This means no out-of-pocket costs are required.

The Buying Process

After identifying a suitable investment property, gather the necessary SMSF funds, and have a binding contract in place, the buying process is:

  • Pay the deposit on the property using SMSF funds (approx. 10% of the purchase price)
  • Settlement occurs 6-8 weeks later once all remaining funds are available
  • The property title is transferred to and held by the SMSF trust

Ongoing Management Of The Property

As trustee of your SMSF, you manage the property. This includes aspects like:

  • Finding tenants and setting rent
  • Organizing maintenance and repairs
  • Ensuring the property is adequately insured
  • Keeping records for tax purposes

The rental income goes back into the SMSF to help grow your retirement savings.

Benefits Of Investing In Property With Super

Some key advantages of using SMSF funds to buy an investment property include:

  • Tax concessions and income tax savings within the SMSF structure
  • Ability to purchase real estate without large personal cash reserves
  • Asset diversification by adding property to your super portfolio
  • Potential for solid long-term capital growth

Seek Personal Advice

While this overview covers the basic process, always get professional tailored advice before proceeding. The regulations around SMSFs and property investment can be complex.

For guidance specific to your situation, call (0433 213 993) or click here to request a consultation with our property investment specialists. Take control of your financial future today!