Turning the complexities of SMSF investing into simplicities

Buying Australian commercial property through a Self-Managed Super Fund (SMSF) is not only a smart investment strategy but also an incredibly popular one.

As the largest sector in the Australian superannuation industry, many are taking advantage of acquiring in the name of their SMSF to purchase commercial real estate.

SMSF property investment can have great rewards:

  • Combine your family income

Instead of being assessed as an individual, the income of all members participating in your SMSF will be taken into account by the bank. This opens doors to stronger borrowing power and more robust investment opportunities.

  • Tax-effective investing:

Earnings (such as rental income from a property owned by the fund) are taxed at the flat concessional tax rate of 15% (unless the retirement age of the SMSF’s members deems them tax-free). For most sophisticated investors this will be far less than their marginal tax rate.

If a property is held in your SMSF for over 12 months, you only pay 10% on capital gains. And when a member of the fund reaches the age of 60 and retires, or reaches the age of 65 [as of 1 July 2007], any income received will be completely tax-free.

  • Pay yourself rent:

If your business plans to lease the SMSF’s property, the rental paid to the fund (i.e. the landlord) is tax-deductable. While not necessarily popular for investors in syndicates, this is certainly a fundamental benefit of SMSF property investing and a great way to free up funds to grow your business.

  • Pay your loan off quicker:

You are able to salary sacrifice additional income into your super, which can bolster the fund balance faster. Rather than paying your marginal tax rate on the income, you will pay 15% tax on salary sacrifice before making additional repayments.

Most of our syndicate members use their SMSF when investing alongside us. As experienced commercial property investors, we are used to turning the complexities of SMSF investing into simplicities.

For more information on how you can invest alongside us using your Self-Managed Super Fund, get in touch with Properties & Pathways.