Buying a Melbourne Property With Your Self-Managed Super Fund

Buying a Melbourne Property with Your Self-Managed Super Fund

Buying a Melbourne Property with Your Self-Managed Super Fund property via a self managed super fund (SMSF) can be a worthwhile strategy, but the process and rules around SMSF property investment are complex. For this reason, you should always seek qualified and experienced advice before making any major decisions regarding your SMSF.

SMSFs are a popular way for Australians to take control of their retirement savings. According to the Australian Taxation Office, as of June 2021, SMSFs held assets worth $822 billion – around 25% of total superannuation investment assets. While shares and cash make up the majority of SMSF assets, investing in property is also a popular strategy.

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However, residential property investments can be a little different from other types of SMSF investment. Generally, residential property cannot be lived in by SMSF members or their relatives, and it can’t be used for holiday purposes either. In order to buy a property with your SMSF, you’ll need to have enough money to pay the purchase price as well as cover any ongoing expenses like rates and insurances.

In addition, property ownership within an SMSF comes with unique tax benefits. For example, rental income and capital gains from SMSF-owned properties are generally only taxed at 15% – which is significantly lower than most people’s marginal tax rate. Also, if you sell a property held by your SMSF after owning it for more than 12 months, you’ll receive a one-third discount on the capital gains tax that you’d normally be required to pay.