When I ask a client as part of their loan analysis how much they have in super the reaction I get is usually something like this – “Super??…. uhmmmm… I wouldn’t know…. think I have a couple of funds… might have a statement in my drawer… I will have to get back to you…”
I am in no way trying to mock these people, as I was previously one of them until I educated myself on the topic. Not caring about my super, where it was and what was happening with it. Superannuation is viewed by most people as out of our control and so far away it is not important.
I would like to share some information on Self-Managed Super Funds (SMSF) through a series of blogs to help you all understand what options you have.
Setting up a SMSF for yourself and family is a great way to take a more active role in the management of your assets. The compulsory superannuation contribution is set to increase from 1 July 2013. It is a slow roll out of increases that will result in contributions going from the current 9% to 12%.
A financial planner will need to advise you on the investments that best suit your individual needs. An investment you may not have thought of is the purchase of a property.
Previously SMSF’s were able to buy property, but they were not able to borrow to buy property. This made it inaccessible for the average Australian. SMSF are now able to borrow up to 80% of the property purchase price for residential properties. Making it a great investment option. Here are a couple of great benefits from buying an investment property through an SMSF.
– Rent received and your employer superannuation contributions are used to service the loan
– Your household budget will not be greatly impacted
– The maximum tax rate that will be paid on rent is 15% in comparison to a maximum of 46.5% outside of super
– The capital gains tax applicable on the property once it is held for more than 12 months is only 10% and 0% once you are at pension age
Further details and tips to follow in my series of understanding SMSF’s.