Using Super to Buy Investment Properties in Melbourne

For many Australians, getting onto the property ladder is a goal that is difficult to achieve without some sort of help. Thankfully, thanks to self managed super funds (SMSFs) and the government’s First Home Super Saver Scheme it is now possible to Using Super to Buy Investment Properties in Melbourne.

At what age can I access my super?

SMSFs are regulated by the Australian Taxation Office and the purchase of residential property within an SMSF has to comply with strict rules. If you’re considering buying property in your SMSF it’s important to understand the rules, costs and risks involved.

In order for an SMSF to buy a property it must meet two key requirements: The SMSF must not have more than $200,000 in it. This includes both compulsory and voluntary contributions made to the fund. The property cannot be occupied by any members of the SMSF, their spouses or their children. It also must be bought under a limited borrowing recourse arrangement (LRBA) where the SMSF trustee obtains a loan from a lender to buy the property.

Property investment through an SMSF is often referred to as negative gearing and provides the opportunity to accelerate wealth creation in the long term, however there are some risks to consider. The most significant risk is that if the property is purchased outside of super, any rental income or capital gains will be subject to tax, which can significantly reduce the return on the investment.

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