Buying Property as a Portfolio Investor

Macquarie Home Group work with Financial Planners that specialise in advising people about how to grow their Super Funds and Self Managed Super Funds.

All your life you have worked hard and paid into your super fund only to find out that it’s not worth what you expected – perhaps it’s barely even worth what you invested into it in the first place. Your dream of retiring with a couple of million dollars has slipped away. Many Australians are struggling to even acquire enough for a modest retirement. We can show you how to take control of your super by investing in the most stable form of investment available, Residential Investment Property.

Benefits of a SMSF

If you have $150,000 or more in your super fund, you should consider converting it to a Self Managed Super Fund (SMSF). Self managed simply means that you are allowed to decide how your money is invested.

A self-managed fund is often managed by a financial advisor or an accountant who, in consultation with you, makes decisions as to how you want your fund to be invested.

A Self-Managed Super Fund gives you:

  • Choice – investment decisions made by the Trustees
  • Control – over how your retirement assets are managed
  • Tax efficiency – lowest rate of tax of any entity
  • Up to 4 family members – combine supers,
  • Flexibility – many options for retirement income streams
  • Why Buy Property in Your SMSF?

Some of the benefits to buying property in your SMSF are obvious, but some are not. Property as a good solid investment will benefit from:

  • Good capital growth and if the last 100 years is a good benchmark to go by your property will double in 10 years.
  • Strong rental returns making it cash positive in a short time.
  • Reduced repayment costs due to low interest rates.
  • Your contributions will go into your fund tax free. This means your contributions will not attract the 15% tax they currently do.
  • The property can start off negatively geared so that in the beginning your fund is technically making a loss.
  • New Residential Investment property benefits from the depreciation any investment does making it even more tax effective.
  • With a volatile stock market and reduced interest rates making cash less desirable, this gives rise to uncertainty as to the future value of your fund.

The Added Bonus – Tax benefits and retirement

Once a property is owned in the SMSF, capital gains and rent are taxed at a lower rate, and when the fund moves into pension phase, the income from the property and capital gain on eventual sale are tax-free.

The investment property can be transferred from the fund into the trustee’s personal name and will avoid transfer duties and subsequent capital gains tax. The individual, or couple can then either live in the property as their principle place of residence or continue to own it as an investment property and use the rental income as they wish.

Macquarie Home Group can assist you with every stage of your SMSF property investment. Contact us so that we can create a financial model tailored to suit your circumstances.