Buying of investment properties through the super-managed super funds becomes very popular with Australian people. People love to own properties so they can increase their wealth and here are the main benefits of using super to buy property
It offers Lower Tax Rates
Purchase of property through the SMSF has a significant tax incentive. The rental income is usually taxed at 15%, and the annual capital gain is only 10% if the property is held for one year and both drops to 0% are the owner of the property retires and receiving fund pension. This means once you retire and opt to keep the SMSF property the received rental income is not taxed helping the investor to invest in other estate and growing the wealth.
It becomes a Rental Business
Once you buy a property through the SMSF, you can’t live in it, and you are not allowed to rent it to friend or family. The main agenda behind the property is creating an avenue for future; it’s for giving you income after you retire. The rent received is also not classified as the superannuation contribution, and you can use it for the non-concessional and concessional funding that is subject to the caps age and contributions. It enables the buyer ability to directly control the super investment and understand the power of real estate investment and also diversify your portfolio.
Helps in Building of Equity
The main reason your property equity become a valuable resource is since it helps you to secure the finance needs of the other goals and investments. Home equity is the known as the current market value of your home, and it’s the price you purchased the home minus the remaining balance. Keep in mind that the market value of the property may down or up, and the same applies to the equity. Also, the home and investment do not guarantee you can borrow against it since it factors in your age, existing debts, and income.
Understanding the Investment Strategy
With the super property investment, the following guidance’s are provided by the Australian Taxation Office
- The investment needs to be purchased on the arm’s length and should be maintained as a commercial property
- The investment needs to meet the sole test and purpose that is providing the retirement benefit to the member.
The super investment properties give the need ability to increase your retirement fund hence giving you a comfortable future.