Buying Property Within A Self-Managed Super Fund

Using Self-Managed Super Funds (SMSFs) to purchase investment properties is a growing trend that requires careful consideration.

How It Works

Investors can acquire investment properties through SMSFs using available funds or leverage via Limited Recourse Borrowing Arrangements (LRBAs).

Advantages

• Super funds are taxed at 15%, much lower than standard marginal rates
• Capital gains receive preferential tax treatment during accumulation phases
• Properties sold during pension phases avoid capital gains tax
• Property investments typically fluctuate less than equities

Disadvantages

• Properties take considerably longer to liquidate than shares
• Transaction costs associated with property sales are substantial
• Market volatility may negatively impact property values at sale time

Critical Restrictions

Properties must generate rental income from external tenants only. You cannot live in the property or have family members occupy it.

This article does not constitute financial or legal advice.