SMSFs are increasingly becoming the option for many investors to buy property. This is because you can borrow money to buy property and enjoy a good tax benefit for investing in property. By buying property through SMSF, Sentinel Property Group shares that you select the kind of investment you need, and that may include direct property. The beauty in SMSF is that running expenses are met by the fund as opposed to a directly owned property, where you pay the expenses from your pocket.
Property rules for Self-Managed Super Funds
For you to acquire property through SMSF, you must comply with the following requirements.
- The property must be for the sole purpose of providing retirement benefits to the members.
- The property should not be purchased from a party related to a member of the fund.
- No fund member or parties related to a fund member can live in the property.
- No fund member or parties related to a member can rent out the property. However, the fund can buy your business premises, and this would make it possible for you to pay the rent to the SMSF at the current market rate.
SMSFs offers big tax incentive
SMSFs have become a great way to encourage people to hold property. The tax benefit for investing in property adds to the retirement savings as opposed to giving it to the taxman. On the other hand, the maximum tax from SMSF property income cannot go beyond 15%. Other expenses such as insurance, maintenance, and council rates can be claimed inform of tax deductions. Besides, if the fund retains a property for 12 months or more, the tax from capital gains cannot rise beyond 10%.
Through SMSFs, you can invest in different types of property such as residential, commercial or industrial property so long as you meet the SMSF property rules. Besides, it is a great way to benefit from the tax on property investment.