Have you put setting up a SMSF in the too hard basket?
July 1st, 2015 • 2 comments
If you are asking the question should you start a SMSF its definitely worth exploring. With industry funds starting to lose their shine since the spectacular crashes of the GFC, SMSF property investing is becoming more and more popular. Did you know you can invest in all types of established property, including residential property, commercial property, industrial property and even a farm through your SMSF?
In this weeks blog we break down what exactly is a SMSF, who it suits, and the reasons why an investor might consider it.
What is a SMSF?
A self managed super fund (SMSF) is a trust structure that can be used to manage retirement savings on behalf of its members. SMSFs are established for the sole purpose of providing financial benefits to its members in retirement, the benefits can also be passed to beneficiaries upon death.
Who does it suit?
Just about anyone!
If you contribute to super and are able to be a trustee then you can have a SMSF.
It is most appropriate for those who wish to have direct control over investments, wish to diversify for example including property and generally have over $200,000 in existing super.
Should you wish to buy property using your SMSF, you need to comply with the following rules:
- Must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members
- Must not be acquired from a related party of a member
- Must not be lived in by a fund member or any fund members’ related parties
- Must not be rented by a fund member or any fund members’ related parties
Property purchases via your SMSF should be considered long term assets designed to benefit you now and into retirement.
Why should I consider a SMSF?
As well as having control over your investment, you pay little or no capital gains tax if you own& sell the property over the age of 60!
The tax benefits connected with super can improve returns from having property in your SMSF as it enables you to focus on your personal situation.
You also have the ability to increase borrowing power from using super contributions from family or business partners. Did you know you could even own your business premises in your SMSF, which can assist cash flow and funding.
The key to making a successful SMSF investment strategy is educating yourself and using SMSF professional advisor.An incorrectly established SMSF can cost the investor thousands, so its worth getting the right advice from a financial advisor at the start.
So should you start an SMSF? Possibly. If you’ve taken the time to understand your responsibilities as a trustee, the costs involved and how you’re going to invest, seek advice and give it a go.
We already have investment properties. Is it possible we can open SMSF account and transfer existing properties to the SMSF account?
Your advice will be highly appreciated.
Thanks and kind regards,