Am I able to borrow to purchase a property in a self-managed super fund?
Yes, many banks provide loans to be able to purchase a property within an SMSF of up to 80 per cent of the property value. Our lending specialist of HKS Mortgage Broking can assist you in comparing loan products on offer and manage the process through to settlement. Remember that our services come at no extra cost to you!
What potential tax benefits apply when owning a property inside an SMSF?
Rental income and any capital gains earned from an investment property is taxed at 15 per cent. This rate drops to 10 per cent for capital gains tax after the first year of ownership. There is no capital gains tax payable on the sale of a property in pension phase.
Do I pay the mortgage and other expenses of the property?
No, the SMSF is responsible to cover all costs relating to the property such as rates, interest, maintenance fees, body corporate fees, and any other fees imposed by the property. The SMSF also pays for all deposits on the investment property. All expenses are generally tax deductible to the fund.
What about land tax?
As the SMSF is the beneficial owner of the property, the SMSF is responsible to pay the land tax (if applicable).
Am I able to purchase a property before my SMSF is set up?
No, the SMSF must be completely set up prior to purchasing a property.
Am I able to purchase my business premises in my SMSF?
Yes, you are able to purchase a business property through your SMSF and then rent it back to your business. This strategy has proven to be beneficial for many business owners as the rental costs are used to build their super.
What happens if I can’t pay the loan for my property held inside the SMSF?
Loans on a property held inside an SMSF are non-recourse. In the event that a loan defaults, the lender only has a right to the property itself and cannot have access to any other asset held in the SMSF.
Can I claim depreciation inside a SMSF?
Yes, you are able to claim standard deductions such as depreciation inside an SMSF.