Which Property makes better Investment Sense in my SMSF ?
As you may be aware, not all properties are created equal!
What this means to you is that only a small percentage of properties available make for a sound Investment for you.
In a SMSF one needs to also take into consideration the following (this is NOT tax advice) :
- A SMSF is taxed at a maximum rate of only 15%
- Most SMSF’s earn very little income from their investments
- Meaning one can only deduct expenses against a taxable income and in your SMSF the only income will come from rent or interest / dividends from monies not invested in your property
- The result is that most of your outgoings will not be deducted and therefore your gearing could be a lot higher than if you owned the property outside of Super
It makes Investment Sense to buy a Property with a Higher Rental Yield which is in a Capital Growth Location !
What this means to the astute investor wanting to take advantage of all the other benefits of Investing in a Property in Super is :
- It makes financial sense to secure a property in a sound location where the Rental Yields are higher
- The higher the rent, the more improved your overall Retirement Savings will be
- The property may not be where you live
- If you can secure a property which meets your investment strategy with a higher rental yield + capital growth this is first prize
See table below for demonstration purposes only clearly demonstrating how a higher rental yield will positively effect the end benefit the outcome of your Super
[The above is calculated using the following : 5.5% interest only; 20% deposit; $10k contributions to SMSF; Including (management fees, insurance, rates, body corp etc); Including (depreciation benefits); 5% capital growth, 3% inflation – once again for demonstration purposes only to give you the general idea that a higher rental yield positively effects the outcome of your retirement planning]
“Not all properties are created equal!”
Based on the above examples it makes financial sense to identify which property is more suited to a SMSF which will return you a higher return on your investment and in a location with capital growth opportunity … you will agree.
Ask us where we have identified properties to suit SMSF investment strategies, complete the form below
Comments or questions are welcome.