Investing in residential property through your SMSF

One of the advantages of self managed super funds (SMSFs) is that you can invest directly in residential property through your super.

Owning a residential investment property within your SMSF can be significantly more tax effective than investing in a property in your personal name.

Investing in Property in SMSFs 

Our residential property investment expert Tim Coates talks about the benefits of buying a residential property in super.

Tax advantages of investing through your SMSF

Firstly, the maximum rate of tax your SMSF will pay on rental income is 15%. And if your SMSF is in the pension phase, this rate drops to 0%. This compares favourably with personally held property where rental income is taxed at your marginal tax rate, which in some cases can be as high as 46.5% (including Medicare levy).

Another advantage is that if your SMSF holds the property for more than 12 months, any capital gain made on the sale of the investment property will be taxed at a maximum rate of 10%, or again, 0% if the SMSF is in pension phase.

Gearing into property through your SMSF

Due to the generally high price of purchasing a residential property that has the potential to provide good long term returns and capital growth, it may be appropriate to borrow to purchase a property within your SMSF.

Borrowing to invest in property can help your SMSF maintain an appropriate level of diversification within your fund.

Download our SMSF Gearing Brochure. This brochure explains how you can gear into residential property and the benefits available.

Read our article on residential property & your SMSF.

Read an assessment of the Australian residential property market by leading economic journalist, and Dixon Advisory Deputy Chairman, Max Walsh, from one of his weekly Max’s Thoughts commentaries exclusive to our Gold and Platinum clients. 

Contact Dixon Advisory about investing in property.