Everyone is talking about SMSF’s these days. Even with the changes proposed by the government (such as the $1.6M cap) SMSF can be the way to go.
Very simply, SMSF is a super fund that you fully control. You make all the investment choices – including shares, managed funds, property, and cash. SMSF’s can borrow from a bank to purchase investments, but this opportunity might be limited.
Choosing the right STRATEGY for your SMSF is the key.
One great strategy can be to purchase your business premises in your SMSF or purchasing an existing commercial property you own with your SMSF. Either strategy means that you can get your super money working for you now and save significant dollars.
If you already own a commercial property outside of super it can be worthwhile looking at transferring that property to your superannuation fund also. It may help you free up cash and possibly even reduce your personal non tax deductible debt on your mortgage.
We had one client that we did this for. They owned a commercial property outside of their superannuation fund. The property was worth $275,000. They had a small loan left on the premise of $50,000 approx. They netted after Capital Gains $205,000 that left them with only $50,000 left on their personal mortgage. A great outcome for the client.
Furthermore they have net tax savings of $2,175 every year now because the income from the property is taxed at 15% not 34.5% & 39%.
Another key reason for using a SMSF is that it gives you exact estate planning options. For example, you can nominate a specific dependent (spouse or child under 18) to receive your super benefit if you die. Unlike a Will, this cannot be contested.
Would you like NO TAX on your Investments?
Once you turn age 60, you can start to pay yourself a pension from your SMSF, and there is NO tax on income of the SMSF and NO tax on any capital gains.
This means you can gradually sell down assets (including property), held in your SMSF and pay NO TAX regardless of any capital gain you make.
This is an absolutely fantastic outcome – and it’s possibly far better than owning an investment property in your individual name or in a Family Trust.