With the right advice, structure and property type, it is possible to by a House with your SMSF.

Major Benefits Of Using Your SMSF

Tax Effective Structure and Retirement Security.

There are 2 major phases in your building your SMSF,

  1.  Accumulation Phase
  2.  Pension Phase

During the accumulation phase, if the property is sold during this phase – the capital gains tax is calculated at a discounted rate; typically 15%.

If the asset is sold while the super fund is in pension phase, it’s tax free.

The major benefit of using your SMSF is that you can purchase a growth asset, tax-effective, and have a valuable asset tax-free in the long-term for your retirement. Get Wealth accumulation and Retirement security using this effective strategy.

Your super fund will be taxed at a lower rate and the capital gains tax may be discounted.

Example

If a property is purchased for $600K in 2019 using an SMSF Structure. The beneficiaries of the SMSF Trust are both 45 and they plan to retire once they reach the legal age to be eligible for the pension. See Australian Human Services.

The property is worth $2,500,00 at retirement age. Because the trust has the correct structure, is well administered, met it’s tax obligations and the property is held long-term. The capital gains resulting from the sale of the property can be tax-free, which is a huge benefit to the retired couple.

Making Your SMSF Work For You

How can you start this retirement/wealth accumulation strategy? You must have

  • Correct SMSF Structure
  • The correct loan and property type
  • Compliance and process
  • SMSF Administration and SMSF Accounting

This might sound like a long list. Moneta Super can help you with this strategy and relieve you from a lot of the administration work. 

Correct SMSF Structure

There are many SMSF trust structures. And to complicate the matter, requirements are constantly evolving, reporting, and obligations. Some structures are more suited for “Limited Recourse Loans”, the typical loan type for purchasing property through your SMSF.  You will need current professional advice and execution to have the correct SMSF structure in place.

 

The correct loan and property type

Loaning monies through your SMSF is restricted to certain loan types. Also, the type of properties is restricted – for example, the property cannot be used for a personal benefit such as a holiday home. It is best to check with an SMSF specialist for advice on loan and property type.

 

Compliance and Process

Like other types of Superannuation instruments, compliance plays a large part to successfully running an SMSF.  It is a specialised field with constant changes in compliance rules and financial innovation.

Getting your compliance and process right when managing your SMSF can mean the difference in selling your property capital gains tax-free or paying thousands of dollars in taxes.

 

SMSF Administration and SMSF Accounting

SMSF Administration can be a chore. Failure in administration can often lead to non-compliance which can become an issue when it comes to reaping the benefits of owning a SMSF.

Like most trust structures, Your SMSF needs to be audited annually and follow the correct accounting procedures.

 

If you have questions about setting or maintaining a SMSF, please contact Moneta Super on (03) 9813 0133. We can schedule a consultation with a dedicated SMSF Specialist to review your situation.

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Whatever your SMSF needs are, we're here to help you. Get Advice from a fully qualified specialised professional.

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