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Retirement Savings Through SMSF Investment

In Australia, using a self-managed super fund property or SMSF to purchase an investment property has become immensely popular. It is not typical to find builders who can offer brand new home builds with single contract finance options (which allows both a land contract and house contract to be bundled and suited for SMSF investors). Due to this shortage of “single contract” finance options available for house and land packages on the market, BBA have partnered with trusted builders across Australia that offer a range of Traditional and non-traditional housing options to meet this requirement. Read on for more information on SMSF and how BBA can help you kick start your investment journey.

Retirement Planning and SMSF

Self managed super funds are private super funds which are regulated by the Australian Taxation Office. Self managed super fund retirement planning is associated with the management of the super fund and that gives an individual greater control as well as flexibility over their retirement savings. As opposed to choosing an industry superannuation fund which manages your fund portfolio for you, this financial vehicle enables an individual to make their own decisions about the investments they want to make that are also aligned with the various goals of their retirement. 

An individual can manage the fund by himself or herself as a trustee or can also pool capital with around four other members who then become the acting trustees of the fund. The flexibility associated with SMSF makes it extremely appealing. A wide range of SMSF investment types can be considered by investors such as property investments, vintage cars and so on. 

It is upon the trustee/s of the self managed super fund to manage the fund sufficiently to obtain the greatest benefits upon retirement. Depending on your circumstances, goals, risk appetite and willingness to take on the extra responsibility to manage your own SMSF, this may be a suitable set-up for you. It is highly recommended to seek professional advice from your accountant or financial advisor before thinking about investing via SMSF due to there being many regulations and guidelines that should be understood first. 

Benefits of Managing One’s Own Super Fund 

The main advantage of using a self-managed super fund is that the rental income and the capital gains that are generated by a property owned by means of a self-managed super fund are taxed only at 15%. There are also expenses that can be deducted from property investments that can help with effective tax management.

One significant point that deserves mention is that when the fund enters the pension phase then the self-managed super fund is granted further capital gains tax exemptions. This ensures that financial security can be optimised and the savings can grow in a more optimal way at retirement stage.

An LRBA or a limited recourse borrowing arrangement is the way in which funds can be borrowed for the purpose of purchasing a property for SMSF holders. Tenants In Common can also be used when borrowing needs to be split across the family home and the super fund. For further information on SMSF, please refer to this link: Self-managed super funds | Australian Taxation Office (ato.gov.au)

Self-Managed Super Funds - A Great Financial Vehicle 

An SMSF account opens the doors allowing for diversification of investments and making the most of the tax benefits available. Managing one’s own super fund also paves the way for investing in residential property and this residential property could be a traditional house or townhouse. 

Particularly focusing on new house and land packages for your SMSF investment can be a great opportunity for building wealth and returns due to lower maintenance costs and larger tax depreciation benefits. Our trusted builder network can offer “Single-Contract” housing options for Traditional House and land, Co-Living, Dual Living and NDIS/SDA and BBA will help you narrow down your house and land package search depending on your borrowing capacity and requirements.

While property investment via a Self-Managed Super Fund happens to be a very lucrative investment option for some, it can also be a seemingly complicated process to get set up and there are certain regulations and a number of compliance requirements that need to be taken care of. So as mentioned earlier, before looking into an investment, always check with your accountant/financial advisor to review your legal/tax obligations and any associated conditions that are applicable.

Final Note

Self-managed super fund is a great option or choice for people who would like to gain better control over their retirement savings and also access available tax benefits while making investments in the real estate market. If you are already set up with an SMSF or in the process and have spoken with your financial advisor/accountant then please contact BBA today for more information on our “single-contract” new house and land packages.