New superannuation legislation and an evolution in bank products over the last few years have made purchasing a property through superannuation with a bank loan a realistic proposition for many investors.

The advantages of buying a property through a Self Managed Superannuation Fund (SMSF) are many:

  • Your investment property can be made exempt from capital gains tax if sold in the pension mode
  • Allows a high level of gearing (borrowing) within your superannuation fund
  • Diversifies your superannuation from traditional super assets such as shares to include residential property

The first consideration that will need to be addressed is whether buying property through an SMSF is appropriate given your current situation and your current superannuation structure. Once this is determined, setting up a SMSF involves the creation and signing off on a series of trusts and companies that will allow your superannuation to legally hold the property.

An appropriate investment strategy that determines the investment breakdown of your total superannuation benefits according to a weighting that you are comfortable with, and ensures your super is not over-exposed to one particular asset class comes next.

It is also vital to have a written flow chart that shows how the property will cashflow in terms of the necessary loan repayments, property expenses, receipt of incoming rental payments and the taxation affect that it will have on your super fund.

Ark Total Wealth has worked with many clients to help them purchase property through superannuation and can guide you the process from A to Z.

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