Superannuation is an untapped resource ignored by many Aussie homeowners and renters alike. If you don’t own your own home, then your super balance is your largest security. You can set yourself up for a great lifestyle when you retire by finding smart investments and maximising the growth of your superannuation.
Retirement may seem like it’s a lifetime away. Starting to invest your superannuation in property earlier on will give you a better return on your investment so you can live the life you want when you eventually retire.
What’s stopping you?
There are no start-up expenses. You don’t need to pay to set up your Self-Managed Super Fund (SMSF) or buyer’s agent fees (around $5k each). These expenses are all taken out of your super fund instead of your bank account. Then you can watch your capital growing at a far faster rate than the interest you were previously getting from your super fund.
$900K VS $6M Super balance – Which would you choose?
Let’s look at a case study:
Imagine, two men, exactly the same age (35), with the same super balance ($120K). The first plays it safe and sticks with his industry super fund which grows at a rate of 5% p.a. He retires with $900K.
The second man has sought advice from a property investment company. He purchases a Sydney property for $400K via his SMSF (Self-Managed Superannuation Fund). When he retires, this property is worth $6M.
The second man is borrowing 80% of the property value at the purchase price ($400K) so his capital appreciation is based on the 400K as opposed to the first man whose capital appreciation is on the $120K.
An extra $5M in my super fund? Yes please!
When you do the math from our case study, this property investment has left the second man retiring with over $5M extra in his super fund, setting himself up for golden years indeed. At Dream Design Property (DDP), 50% of their clients are using superannuation to buy property. DDP Founder, Zaki Ameer stated, “At first, most of our clients shy away from using super to buy property, until we run through the benefits and explain how all fees are taken from their existing super balance, meaning NO OUT OF POCKET EXPENSES to get started”.
Substantial tax benefits from buying a property with your SMSF
You can save money on your taxes by purchasing a property using a SMSF instead of under your own name. A super fund’s tax rate is 15% which means that if your property has a net positive cash flow of $20K p.a., then you pay $3K in tax. When purchased under your own name, you will pay $7-9K tax (depending on your marginal tax rate).
What if my super balance is too low?
You can combine your super fund with friends and family if you have a low super balance. The benefits from property capital growth are accessible to nearly everybody, you just need to know how to access them.
Contact the team at DDP to find out more about getting the most from your SMSF with smart property investments.
For all media enquiries, please call Olivia Parker on 0428 255 637 – [email protected]