We were reading one of Australia’s leading banks’ quarterly publications when we came across an article talking about how people can save more effectively for retirement. The article talked about the security of investing in property through a self managed super fund, and using that to take advantage of entitlements that come with investing through superannuation.
We’ve talked on the I Love Mudgee blog before about the investment opportunities in Mudgee, and the rewards Mudgee property investors can reap, especially when there is a rental housing shortage in the area. So what are the benefits of investing through a self managed super fund?
With the end of financial year approaching, people who are conscious and actively managing their superannuation are thinking about ways in which they can save money and capitalise at tax time.
Firstly you’ll need to have a self managed super fund set up, which you should talk to you financial advisor about. Generally speaking for those that do self manage their super fund, buying an investment property through the fund instead of outside of it can have many tax benefits including:
- Rental income earned by the property is taxed at the lower superannuation rate (currently 15%) instead of the normal income tax rate (see applicable tax table at the ato.gov.au).
- Property investment through your self managed super fund may suit your retirement goals better than shares or other investment opportunities.
- Once you retire you can draw a pension from your self managed super fund, potentially tax-free depending on how yours is set up.
- If you sell the investment property after 12 months, capital gains tax is less than selling a personally owned investment property, and can even be tax-free if you’re drawing a pension already.
Although the process is more complicated than buying an investment property straight up, the benefits later in life can be well and truly worth it. Make sure you speak to your financial advisor about your plans and options before proceeding with any real estate transaction, and ensure you follow compliance rules and obligations.
We think that given Mudgee’s booming investment real estate market, there is a massive opportunity for Mudgee residents to successfully plan for a secure retirement, starting now. Give us a call on 02 6372 2584 or contact us if you’re interested in investment opportunities in Mudgee.