Superannuation Property Warrants
Superannuation funds can now borrow money to purchase real estate. An investor can have just as much choice and control over investment properties inside as outside a superannuation fund.
Many Australians have significant money in superannuation, and more and more are establishing their own self managed super funds (SMSFs). Many people would like to be able to include direct investments in real estate in their super fund’s investment portfolio.
SMSFs want to gear their real estate investments in order to diversify risk, increase the yield on the investment, and because many funds do not have sufficient money to purchase real estate outright. Until recently, this has not been possible for most SMSFs because of restrictions on superannuation funds borrowing and charging their assets. However, the Superannuation Industry Supervision Act (SIS ACT) was amended in September 2007 to allow super funds to borrow and charge their assets so long as a special structure is used.
Tax benefits
- A maximum 10% capital gains tax on sale of property if held for at least 12 months and potentially nil if sold in pension phase.
- Maximum of 15% tax on rental income.
- You may effectively receive a tax deduction (via salary sacrifice) for loan repayments of the principal (which you cannot normally do).
- The interest costs are tax deductible and can potentially reduce the 15% contributions tax to nil.
- For small business owners, additional tax concessions and asset protection from creditors may be achieved.
- Unlike other property investments, as a business owner you can 'sell' the business premises you own into your SMSF – in Victoria there is not even any stamp duty on the deal.
2010/2011 FEDERAL BUDGET UPDATE |
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