Property Investment Using Self Managed Super Funds

Secure your retirement by investing in property. Australia’s super fund members are risking their nest eggs on the back of global share market volatility. Investing in property is fast becoming a popular way of safe guarding your super money. As with all investments, you need to be careful and diligent in doing your research or leverage someone else’s knowledge to increase your chance of success. 

Wise Real Estate Advice specialise in targeting high growth investment property investment using self managed super funds. Our experienced buyers agents customise the buying process to each individuals needs.

Benefits of SMSF Property Investment

  • Greater control of your own investments
  • Ability to borrow safely via non-recourse loans
  • Only 15% tax on net rental income
  • Zero capital gains tax on income or capital gain after age 60
  • Leverage a high value asset.

The Australian Taxation office has made a number of restrictions on on the type of investment available to SMSF beneficiaries, below is a table outlines ATO statistics of the most popular forms of SMSF investment. 

SMSF Assets HeldValue 
Australian Listed Shares$187B
Cash and term deposits$159B
Managed investments$31B
Non-redidential property.$68B
Residential property.$24B
* Based on ATO SMSF quarterly statistics – June 2016.

To minimise your dependancy on finance it advisable you have 50% to 60% deposit (of the property value) in your super account, you can then open up your own SMSF. Over the past years large SFMS have outperformed small SMSFs as they are able to provide: a more diversified portfolio, a more experienced in the industry, and lastly, they operate a lot more effectively. Remember, that putting all you super savings all in one basket rather than in a range of investments, can be an extremely risky strategy that should only be done by a professional.

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.

Due to the complexity of arranging finance for a self managed super fund it’s critical your mortgage provider to guarantee your finance with no conditions upon which approval is based. With this type of lending it’s common for a bank to approve conditional finance prior to a purchase and offer a number of complex conditions which the loan is based. When dealing with any banks I aways apply the saying ‘the devil is in the details.’ 

Managing a SMSF will involve a great deal of expertise, responsibility, money and time. It can cost up to $20,000 to set up a SMSF, however other costs need to be consider as well, such as accountant fees, adviser fees, ongoing annual fees, and legal fees, to ensure that everything is working properly.

How A Buyers Advocates will help with:

  • Assess buyer’s portfolio / superfund requirements.
  • Reduce lending risk / borrowing rejection. 
  • Target a property with maximum capital growth and provide the buyer with detailed reporting on the selected property and its suburb.
  • Obtain both the market value and the rental returns of the property.
  • Negotiate a fair market value with the seller or attend auction.
  • Recommend building inspectors, advise competent legal representation and attend the final inspection.
  • Choosing a local real estate agent to manage your investment property.


A Wise Strategy

Using your super funds to purchase property is a great investment strategy. Making sure your purchase the right property that maximises capital growth is something you have to get right from the start. For a free consultation on how a buyers agent can help leverage your SMSF strategy please call 1800 00 WISE. 

See the Australian Taxation Office’s webpage on self‑managed super funds for more information.

Watch: Whats involved in setting up a Self Managed Super Fund, provided by the Australia Tax Office

buyers agents and Self Managed Super funds

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