SMSF Investment Property
Your SMSF Owns Your Property, You Own Your Retirement
How Does SMSF Property Investment Work? Your Complete Guide
SMSF Property — Supercharge Your Retirement
Your Super Fund is your retirement nest egg.
Pleasingly versatile, it allows you to explore a wider range of investment options — including the exciting world of bricks and mortar. And, offering potentially favourable tax outcomes, creditor protection, and flexibility — SMSF investment property could be your ticket to future financial freedom.
But, while property is a much more interesting and tactile investment choice than shares or bonds, they come with a unique set of rules and regulations. It’s crucial to get expert guidance to ensure you’re making well-thought-out, compliant decisions that will maximise your retirement potential.
That’s where we come in. At Property Portfolio Solutions (PPS), we’re your trusted partners in navigating the complexities of SMSF property investment. We’ll help you understand the rules, identify suitable properties, and develop a strategy that aligns with your retirement goals.
The Benefits of Property in Your SMSF
Deciding to put property in your SMSF can give you numerous benefits, depending on your circumstances.
Here’s why buying property with your Super could take your investment to the next level:
Taking control of your own money — your SMSF allows you to supervise and manage your property investments, giving you the chance to make decisions that correspond with your goals and ambitions.
Diversification — property can be a valuable inclusion in your Super’s portfolio, providing diversification benefits and the potential for long-term growth.
Leverage — you could use your SMSF to borrow money to buy more property, boosting your investment capacity.
Estate planning — SMSF properties may be transferred to family members or loved ones when you pass.
Creditor protection — generally speaking, debt collectors cannot touch properties in your Super, e.g., during bankruptcy.
Suitable for everyone — whether a first-time or seasoned property investor, it’s never too early to consider property in your SMSF.
Industry/public funds can’t buy property — only an SMSF allows you to directly invest in bricks and mortar.
Favourable tax outcomes — income earned from property in an SMSF is typically taxed at a concessional rate of 15 percent, lower than individual income tax rates. And, your Capital Gains Tax position may also be improved.
At Property Portfolio Solutions, we will help you work through the bewildering and complex details of using your Super to buy investment property — and tailor a strategy, in consultation with your financial advisor, that meets your financial freedom dream.
What Type of Property Can Be Included in an SMSF?
Here’s the good news! SMSFs are surprisingly flexible, they allow you to include a variety of property types in your retirement fund — in fact, the only property you cannot buy is one to live in yourself or for your family!
Residential Properties
Houses, apartments, townhouses, duplexes — basically, any structure that people live in. They give you the potential to earn SMSF property rental income and increase the value of your Super. But, remember, you can’t live in it, nor can you rent it to a close relative!
SMSF Property Development Buildings
This includes vacant blocks, subdivisions, or building a brand-new property from scratch! They offer an incredible potential for massive capital growth, but it’s important to understand the risks and complexities involved. And, of course, any development must be for genuine retirement purposes and comply with SMSF rules.
Your SMSF Owns Your Property, You Own Your Retirement
SMSF Property Investment Strategy
So, what is an SMSF investment strategy? Think of it as Google Maps for your retirement plan. It’s an outline of where you want to go (your financial goal) and the route you’ll take (the property, in this case, going into your Super). This isn’t just some clever paperwork that shows your plan — it’s necessary for every SMSF.
As an SMSF property investment example, it outlines your financial objectives, the type of assets you’ll invest in, and how you’ll manage risks, returns, and liquidity requirements. Your strategy helps you stay focused as your life and market conditions change.
Your personal SMSF strategy is tailored to match your circumstances, dreams, and goals, whether you’re seeking regular rental income, long-term capital growth, or a healthy balance. At PPS, we’ll work with your chosen financial advisor to build a mighty SMSF property strategy designed to fulfil your retirement vision.
SMSF Borrowing Requirements
Do you want to use your Super to borrow and then buy an investment property? It’s possible!
But hold on, it’s not quite as straightforward as getting a regular home loan! You need to follow special rules called Limited Recourse Borrowing Arrangements (LRBAs). They set out how to borrow within your SMSF and what you can or cannot do.
If you read the regulations, we know they can look more than a bit confusing, but don’t worry, we’re here to help! At PPS, we have years of experience navigating the ins and outs of SMSF borrowing. We’ll help you understand the rules, crunch the numbers, and make sure your strategy stacks up.
Consider the possibility of retiring earlier than you thought possible. By borrowing from your Super to invest in property, you’re not just building wealth, you’re potentially accelerating your retirement plans. This leveraging — using borrowed money to invest — is a proven strategy, not just in property, but in general financial success.
SMSF Compliance Guide
SMSF property investments come with a whole bunch of rules — like who you can buy property from and who you can rent it to. What’s more, they seem to have their own incomprehensible lingo that you need to wrap your head around. This can make SMSFs overwhelming for newcomers. Yet staying compliant is vital.
But rules are nothing to worry about, you follow the rules every day when you drive your car or run your business — it’s just part of doing things the right way. At PPS, we make it simple. We’re experts in SMSF property, so we know the regulations inside and out.
We’ll make sure your investments are squeaky clean and compliant, while maximising your returns. Plus, we’ll explain everything in clear, non-technical language, so you’re always in the loop. Whether it’s lodging the right documentation or verifying legal obligations when acquiring property, our team provides hands-on support.
With PPS by your side, you can rest assured you work within SMSF Property Development Rules and that your investment is robust and fully compliant.
SMSF Comparison Guide
Opting for the right strategy and/or structure for your investment property affects areas such as statutory compliance, taxation levels, and asset safeguarding. Although SMSFs boast significant benefits — from estate planning to flexibility — they’re not suitable for everyone’s goals and requirements.
For example, individual ownership is straightforward, needs little paperwork, and has few compliance regulations — but can leave your assets at risk should you experience financial difficulty. Plus, there are additional ownership options to consider — such as joint, trust, and company ownership.
Understanding the differences, advantages, and downfalls — and how an SMSF property structure compares against alternatives — is necessary to find the ideal path that meets your goals, ambitions, and risk tolerance. Our detailed SMSF Comparison Guide explores every angle to help you make the best decision.
SMSF Property Investment Tax Advantages
Using an SMSF for your property investment may deliver favourable taxation outcomes, which could consequently enhance your retirement wealth. Typically, rental income is taxed, but usually at a lower rate than for individuals. Furthermore, you can often claim deductions for expenses like property management fees and repairs.
Currently, as long as the fund member’s balances are under the statutory level of $1.6M — and in the termed accumulation phase — all income is taxed at 15 percent and capital gains at 10 percent. This all changes when the fund enters into the ‘Pension Phase’ when all income is tax free!
At PPS, in collaboration with your financial advisor, we’ll help you navigate the tax intricacies of SMSF property investment. We ensure you remain compliant and that all necessary documentation and submissions are presented promptly.
Are There Any SMSF Property Investment Risks?
At PPS, we’re all about being upfront and honest.
Using your SMSF for investment property can be a fantastic way to boost your retirement savings — but, it’s not all rainbows and unicorns. There are some risks involved, and we want to make sure you know what they are:
Market fluctuations — property values can go up and down, be ready for the long term, and don’t panic sell if there’s a dip!
No tenants — sometimes, your property could be empty, and you’ll still have to cover its expenses, making sure you have a financial buffer is crucial.
Borrowing — if your SMSF gets finance, be aware of the interest rate changes and avoid any defaults on repayments.
Compliance — SMSFs have strict rules, break or ignore them, and you could face penalties or lose your fund’s benefits.
At Property Portfolio Solutions, we work tirelessly to ensure these risks are covered. We will — with your financial advisor — create a solid investment strategy, conduct thorough research and due diligence, and ensure your SMSF stays compliant. We’re here to support you at every step.
Property Portfolio Solutions — Unique in Self Managed Super Fund Property Investing
At PPS, we know that your investment isn’t only defined by the type of property, strategy, or structure you want.
Instead, it’s about making sure your choices help you achieve your ultimate goals and dreams. Whether you’re investing in your own name, through a company, or using your SMSF — the principles remain the same:
Clear purpose — we help you explain your ‘why’, the driving force behind your investment.
Roadmap to success — we create a personalised plan that outlines your route to success, taking into account your risk comfort, borrowing capacity, and long-term goals.
Expert guidance — we give you the knowledge and support you need to make informed decisions.
Although the core PPS strategy is consistent, there are nuances and regulations when we help you invest through an SMSF — particularly with duplex developments. And that’s where our expertise shines. We’ve successfully navigated the complicated hoops and hurdles of SMSF duplexes — which have made us almost unique in the sector.
We Take Care of the Details, You Enjoy Your Retirement
Investing in property through your SMSF can be a powerful game-changer — giving you greater control, investment flexibility, and the chance to build a mighty nest egg.
At Property Portfolio Solutions, we’re your trusted partners — helping you work through the complexities of SMSF properties. We’ll be by your side, liaising with your financial advisor, to make sure your investment is compliant, effective, and driving you towards your ultimate goal.
We Commit to…
Your SMSF, your way — we create a plan tailored to your retirement dreams.
We take care of it all — from building the property to ensuring compliance, we’ve got you covered.
SMSF property pros — we’ll find the right properties to make your SMSF work for you.
Work with your financial advisor — as we cannot give SMSF investment advice, we collaborate with your specialist.
Impressive SMSF income — putting you in touch with reputable agents that provide high-quality tenants for the best rental yields.
Clear communication — no buzzwords, no industry jargon, no hidden fees.
Long-term plan — creating your legacy, we stick with you for the long haul.
Proven results — an exemplary track record, helping countless property visionaries invest in their SMSF.
Investment Property in Your SMSF FAQs
How Often Does an SMSF Need To Value Property?
Every single year! If you buy an investment property with your SMSF, its annual return must include the current market value of your property or properties.
How Does SMSF Property Investment Work?
Your SMSF buys and owns the property, just like you would do it yourself. Your SMSF can borrow money to buy and build the property and receive rental income. The main differences are the rules and regulations you must follow. Always speak to an expert in SMSF investment properties — like PPS.
What Is a Property Investment Strategy for the ATO?
This is a written plan that explains how your SMSF will invest and manage its assets — including any properties. It demonstrates that there is a strategy behind your actions, and it’s a regulatory requirement.
What Happens to Your SMSF Property When You Retire?
When you buy a property with your Super, usually, you have two options upon retirement:
- Keep it in the SMSF — the property remains, and you continue collecting rent. Just be aware of the rules around taking a pension from your SMSF once you reach a certain age.
- Sell it and move the money — sell the property, cash out, and move the proceeds to something like a superannuation pension account.
Your best option depends on your circumstances, plans, and goals.