If you are thinking about ways to make your superannuation work harder for you, you may have considered buying a property with super.

However, it is important that before you attempt this, you seek qualified and professional advice.

As conveyancers, we don’t provide advice on whether or not you should buy a property with super.

However, we can assist if – as directed by your financial advisors and/or accountants – buying property with superannuation is considered a good and proper strategy for you.

So, if you are early on in the discovery phase of working out whether or not you should invest in property using your super, then this blog will help you better understand the steps you need to take and some of the factors you need to consider before proceeding.

Chat to your accountant and other professional financial advisers

Buying property with super can be complex.

Realistically, it’s not something everyone can do.

Whilst you might be looking at all that money sitting in your superannuation account and wondering what else it could be doing for you, there’s a lot of work that goes into being able to use it for the purpose of buying property.

That’s why when it comes to buying property with super, your first port of call should be your accountant.

When it comes to buying property with superannuation, it’s important to get professional advice to make sure it’s the right decision for you.

Your accountant is a good place to start, as they can help you understand whether or not buying property with your super is the right move for you, and what the potential risks and benefits are.

Some of the factors that may be considered include:

  • The amount of money you have in your super account
  • How much money you will need to borrow to buy the property
  • Whether or not you will need to rent out the property to cover the mortgage repayments
  • The Australian Taxation Office’s (ATO) superannuation rules and regulations
  • The tax consequences
  • Whether or not you have a Self-Managed Super Fund (SMSF)
  • The structure of your SMSF and Trust/s if applicable
  • Your age
  • The length of time you have until retirement
  • Your current and future employment prospects
  • What other investments you may have
  • Your overall financial situation and goals

As you can see, there is a lot to consider.

The tax consequences alone can vary greatly.

If you purchase a property via an SMSF, the fund must pay 15% tax on rental income from the property. The fund obtains a one-third reduction on any capital gain it generates on properties held for more than 12 months, lowering any capital gains tax burden to 10%.

The interest payments on a loan are tax deductible to the fund if the property is acquired with a loan. If your costs outweigh your income, you’ll have a taxable loss that you may carry over year after year and use to offset future taxable income.

Any rental income or capital gains generated in the fund will be tax-free until trustees begin earning a pension upon retirement.

Also keep in mind that any tax losses on your property cannot be deducted against your own taxable income outside the fund.

This is an important conversation you must have with your accountant before you think about buying property with super.

Need a trusted referral to a qualified accountant or financial adviser? Contact Tick Box Conveyancing today and we’d be happy to make some introductions.

Speak to a mortgage broker

A self-managed super fund (SMSF) loan is a house loan used to purchase investment property by a self-managed super fund (SMSF). The investment’s profits – whether rental income or capital gains – are reinvested in the super fund, boosting your retirement savings.

It’s worth emphasising that rental income cannot be sold by a trustee or given to a fund member as a pre-retirement benefit; it can only be used to boost the retirement savings that will ultimately be paid out to members after they retire.

Furthermore, the property cannot be purchased from, lived in, or leased out to a fund member or any of their associated parties (save in extremely restricted instances).

Investing in real estate via superannuation is not as simple as investing outside of superannuation. All investments must be made in the best interests of fund members and in compliance with SMSF borrowing regulations.

SMSF lending is complex, so it’s important to speak to a mortgage broker with experience in this space.

If you need a referral to a trusted mortgage broker with great experience in SMSF loans, Tick Box Conveyancing can help. Contact us today.

Buying Property With Super: A team exercise

Should you have received all the advice you need and are confident that buying property with super is the right thing for you, Tick Box Conveyancing has extensive experience helping people complete property transactions that involve SMSFs and superannuation.

We liaise directly with your team of accountants, financial advisers and/or mortgage brokers to ensure we have a clear understanding of how the transaction needs to work within your structure and ensure that all paperwork is filled out correctly.

For more assistance with buying property with super, contact Tick Box Conveyancing today.