What are the tax benefits investing in property with your SMSF?

There are certain befits tax-wise when you invest using your SMSF.

Capital gains tax won’t be paid if your SMSF purchases an investment property and sells it when fund members are in the ‘pension phase’. This could potentially save hundreds of thousands of dollars in tax.

SMSFs are encouraging people to engage with their super in a way never achieved by industry and retail funds. The tax benefits that come from holding investments in a super fund can contribute hundreds of thousands of dollars’ worth of capital gains to your retirement savings instead of handing it to the taxman.

Tax on SMSF earnings is capped at the same rate as other types of super fund at 15%. This means the maximum tax payable on the property’s income is 15%. Any expenses such as interest, council rates, insurance and maintenance can be claimed as tax deductions by the SMSF.

Capital gains tax is capped at 10% if a fund holds the property for more than 12 months and potentially no CGT bill will apply at all if the property is sold after you retire and your SMSF is in ‘pension phase’.  

Meanwhile, industry or private super funds are charged interest on earnings each year which is automatically deducted from members’ accounts. Because SMSFs are permitted to borrow to purchase assets such as property, negative gearing can be used so interest and other costs related to holding the property can be offset against other taxable earnings and potentially reduce tax payable by your fund to zero.

ARE YOUR READY TO INVEST?

If you have decided you want to purchase a property within you SMSF or would like to refinance an existing loan, please click the 'Start Here' button below, this will take you to our online Fact-find platform in which you can fill out your details.

We will connect with you within 1 business day to confirm and discuss the next steps.