Buy A House With Your Super
With house prices continuing to rise, the thought of owning your own home might seem like a dream that will never come true, let alone owning an investment property. Well, through using a self-managed super fund, you can buy a house with your super!
Can You Buy Your Own Home Using Your Superannuation?
Most people are let down when they find out you can't actually buy a house which you can live in, nor can you buy an investment property and then rent it out to yourself.
You can only purchase a property which will benefit you and your savings when you retire. This is called the 'sole purpose test' and is used to make sure you are not presently benefiting from any property purchase using your superannuation.
It's also against the law to buy a home for your relations to live in. You cannot buy, sell or rent a home to or from a relation, trustee or fund member.
Your Super Fund Can Get A Mortgage!
If you want to jump on board the property investment wagon but your super fund isn't full of hundreds of thousands of dollars, you can get what is called a SMSF Property Loan. Basically your SMSF can get a home loan, just like you! The rental returns on the home plus your super payments will go towards paying off the loan. Through using this kind of strategy you could end up with an empire when you retire!
Another great thing about buying a house with your super is that if the worse were to happen and your SMSF defaults on the loan, the other assets in the super fund can't be taken, they are protected.
Save A Fortune On Tax!
A self-managed super fund can take advantage of negative gearing tax benefits and tax cuts just like individuals do. Your SMSF also gets big discounts from the government in terms of tax charged on any rental income the fund earns from the property it owns, the income is generally only taxed at 15%.
If you are over 55 an start paying yourself a pension from your SMSF, then the rent you receive will be tax free, and if you sell the property you will pay no capital gains tax!
Sound good? Ready to start investing in your future? Check out our guide to Setting Up A Self Managed Super Fund to get started!