SMSF Strategy Series – Podcast 3

It’s Business Concepts Group’s Chris Reed once again and in this particular discussion. He is joined by Ben Payne, a Property Development Expert at BCG. Let’s join them as they talk about property investing within super.

It’ll start off with the more general rental type properties and we’ll move through business premises, joint investments, even property development and farmland.

You might be asking by now, why would you get a rental property inside of super in contrast to it being outside super?

Superannuation really is the most protected environment that we have, it’s the most protected structure as it is generally protected from bankruptcy and creditors. So it does make a lot of sense from an asset protection point of view to really build up your wealth within that superannuation environment where it is protected.

Moreover, tax is often put forward as a reason to use super and it is true it is a tax effective environment. we’re paying 15% generally within super, 10% on capital gains, if we’ve held our asset for longer than 12 months; but it is when we reached retirement and start drawing in the pension and move that fund into pension phase then it is effectively comes a tax free environment.

As with other super funds, SMSFs are a way of saving for your retirement. Generally, the main difference between an SMSF and other types of funds is that members of an SMSF are the trustees. This means the members of the SMSF run it for their own benefit.

You do get the personal tax benefit if you are negatively geared; but what you need to remember is that capital gain are the longer terms so by selling your property in your own name that could have a big capital gain would mean a big tax bill as opposed to within super as already mentioned, so long as we have held that asset for longer than 12 months we are looking into a 10% tax bill on the capital gain or if we’ve moved into pension phase we could pay nothing it would be a tax free capital gain.