Economic crises have just ruined all the savings of people and open the door for real estate, which seems much more valuable than before. It offers a welcoming opportunity for planning for a comfortable retirement. Many people are investing in property using their superannuation funds. Since the cost associated with accumulated superannuation funds were very high, so it was not easy to invest in a property. Therefore, there has been made many changes in rules and regulations that simplify the procedure of buying a property with super. Australians are seeing the advantages of establishing their own SMSF setups and also the benefits of self-managed super funds to buy property.
Most people use their superannuation funds to invest in property to plan their retirement years since this process offers them a simple way to
- Save on income tax
- Diminishes the need for paying capital gains tax if they invest in a property
Other than just investing in a property for retirement purpose, small-scale businesses also use this process to maximize their benefits from owning the property. These small-scale businesses utilize their super to invest in commercial property and run their business from and then rent this property to business to minimize their operating cost.
As mentioned earlier, the laws have changed and according to the law of SMSF, when one purchase a residential property using their SMSF, the trustees or any other member of this superannuation funds are not allowed to live in the property. This law is also applicable to all those properties which are purchased by naming them as holiday homes.
But now, according to the new rules, people are allowed to borrow funds inside of an SMSF. There are some significant points that must be noticed and keep in mind regarding SMSF:
- Using self-managed super fund to buy property, one can now buy industrial property as well.
- This process offers an easy way to buy property without the need to drain one’s bank account.
- The money you will borrow will be through Bare trust that will keep the legal title to the property.
- In case, the SMSF is unable to pay the loan back; the lender can take control of the property.
- The members or trustees of the funds remain the same.
Since there are a lot of laws that govern the use of self-managed super funds to buy property, and there are several penalties for non-compliance.
