Reasons to open a SMSF
SMSF (Self Managed Super Fund) is a a popular way of investing in your retirement. And thanks to the 2007 changes in the Super law implemented by the Australian government, SMSF market has significantly grown. Also, the fact that it is managed by the members, makes this type of investment very attractive. SMSF can have one or four members the most, each being a trustee of the fund at the same time. Unlike other types of super funds, a trustee of SMSF is completely in charge and can make all decisions related to the fund (tax obligations, administration, reports and compliance) contributing to the benefits of all members.
One of the reasons growing number of Australians are considering setting up own SMSF is the benefit of buying property through their fund. Self managed super funds property investment has many tax advantages such as the fact that before you retire the net income is taxed at 15%, and after retirement, you don’t pay taxes on capital gains and on the income from the property. If you are considering investing in self managed super funds property, here are few reasons why it is a good investment strategy.
Easy to set
Unlike other funds, SMSF is very easy to set. It is best to seek professional help to ensure the fund is in compliance with all ATO rules. However you decide, you must decide on the structure of the fund, make sure members can be trustees, meet the residency rule, prepare trust deed, open a bank account for your fund and register the fund with the Australian Taxation Office.
Great tax efficiency
If the tax efficiency is what you care about, then you surely want a SMSF. With SMSF you pay a maximum of 10% tax on capital gains before retirement and no tax on capital grains once retired. Also, there is the ability to plan an estate strategy including the payment of pensions upon death to beneficiaries including children.
Control of your SMSF property investment
You manage your SMSF property investment in accordance with the law and for the best interests of fund members. Although the SMSF investors can do a good job managing the fund, you can control your own investments as well. Be careful not to merge accidentally your personal fund with the fund of the fund members.
Your whole family can be involved
SMSF and property can involve the whole family as members of the same fund. This usually isn’t allowed with other types of funds, but with SMSF you have such flexibility to include your family as well.