For many Australians, super investing in Melbourne is a relatively simple proposition. Individuals and/or their employer make regular contributions to their choice of industry superannuation fund. Their contributions are then invested, usually into shares, to grow their retirement balance.
Growing wealth solely through shared investments, however, is a tough challenge — evident in its lack of performance in recent years. To take control of their superannuation, more and more people are investing in properties through a self-managed super fund (SMSF).
Learn more about this increasingly popular way to prepare for retirement and how you can start your journey in property investment!
Basic Facts about SMSFs
An SMSF is a private super fund that you manage yourself. It gives you greater control over where and how you allocate your funds.
- Currently, the maximum allowable number of members of SMSF is four.
- Running your SMSF designates you as the director and a trustee, which means you’re responsible for both of their respective legal obligations.
- It requires a documented financial plan. The investment strategy must detail how the fund will assist the current and future needs of its members, including income protection and disability insurance.
Running your own SMSF can be a high-return path to preparing for your retirement, but it does require significant time, effort, and responsibility to manage properly. Additionally, you also need to choose where to invest your SMSF wisely. For many people, the answer lies in property investment.
Advantages of Property Investment through SMSFs
Property markets have experienced astonishing growth over the last decade. With the help of investment property consultants in Melbourne, buying a property through SMSFs has proven to be an excellent way to improve retirement plans and investment strategies. Advantages include:
- Tax Incentives
Using your SMSF to purchase an investment property helps you benefit from lower tax rates. Rental income requires 15% tax, but if the property is held for over a year, then capital gains will only be taxed at 10%. Once you retire and start receiving income from your SMSF, these taxes go down to zero.
This means that once your SMSF owns the property and you decide to keep it after you retire, then you get to save 100% of the income. You can also grow this further by investing in another property. With personal income tax rates going as high as 47%, relying on SMSF property investments is a financially smart proposition. Keep these in mind when you delve into super investing in Melbourne.
- Rent the Premise for Your Business
All SMSF investments have one purpose: save for retirement. It’s why you can’t live in any property bought through your SMSF. If you run a business, however, you can use your SMSF to purchase a commercial property for your company. This way, you get to run your business without having to pay a landlord and still grow your fund.
Take the First Steps Toward Your Dream Retirement Today!
The investment options you choose today can define your quality of life upon retirement. For over 26 years, Safe Super Homes has specialized in educating, mentoring, and guiding people to achieve their financial goal. We can do the same for you.
Aside from property investment inside and outside SMSFs, we also offer fractional investment in Melbourne among other financial and retirement services. Call our office today at (03) 9702-2595 to talk to one of our consultants and begin your investment journey!