Taking Control Of Your Super
It is important to take into account that buying a property through an SMSF should not be your priority, however it is an option that people can take, if they choose to have more control over their super account.
If you are a small business owner, purchasing a property through your SMSF it can be a huge benefit, because under the superannuation act, they are able to classify their property as their business place.
However, remember operating rent-free or at a discount should not be the reason why you do this, because you will still need to pay rent to the SMSF at the current market value. It is also illegal to classify the property as your business, but then secretly use it as holiday house. The penalty for doing is quite high and is not worth doing.
Even though managing your own SMSF takes a lot of time, money and dedication, this should not be the reason why you don’t undertake the process, as there are a number of benefits, such as having a lot more control over you super, and potential tax benefits.With an increase in popularity of SMSFs, a lot of financial institutions are offering service such as: software and education services, administrative provision, and SMSF administration.
These types of services will ensure that you are up to date with your paper work, tax returns, and arranging an annual audit, or any other general inquires.
Benefits of an Self Managed Super Fund Property
By buying a property through a SMSF, the maximum amount of tax payable on the rent will be 15 per cent. However, if the property is held for longer than 1 year, the amount of tax payable on any capital gains tax is discounted by one third, once it is sold, it bring it to 10 per cent. Another advantage is that once a member receives a pension, supposing they have held the property for a long period of time, then the superannuation fund will no long pay any tax.