For those who are anywhere near the big 60 when all incomes from the super will be tax free, will you use SMSF to buy IPs so all future incomes are tax free. What are the pros & cons. I think the rule may have changed a bit, is it still true that SMSF can't borrow money to buy properties ?
If you are 50 will you use SMSF to buy IPs
- Thread starter oasis1frog
- Start date
Well, I'm 48 as of Feb this year, so two years to go.
I have no intention of ever needing a super fund to help support me when I retire.
I will be able to retire (financially) long before the standard "super" age anyway, and I want access to my assrts and fuunds at any time; not have it sitting there locked away until I'm an old b@stard.
I have super, but I contribute the absolute minimum, and it is really only a safety net for those who have done nothing through their working lives to supplement theie pension.
It's quite scary the amount of people I know currently who are bleeding because their retirment nest egg has disappeared into thin air over the last few months. Screw that.
Yes, it's tax effective (so is property) and so on, but if that's the only reason to be using one in a serious fashion, then I reckon you're in it for the wrong reasons.
If it turns out that after 60 you can buy IP's tax free using super income, this would be a good thing.
I have no intention of ever needing a super fund to help support me when I retire.
I will be able to retire (financially) long before the standard "super" age anyway, and I want access to my assrts and fuunds at any time; not have it sitting there locked away until I'm an old b@stard.
I have super, but I contribute the absolute minimum, and it is really only a safety net for those who have done nothing through their working lives to supplement theie pension.
It's quite scary the amount of people I know currently who are bleeding because their retirment nest egg has disappeared into thin air over the last few months. Screw that.
Yes, it's tax effective (so is property) and so on, but if that's the only reason to be using one in a serious fashion, then I reckon you're in it for the wrong reasons.
If it turns out that after 60 you can buy IP's tax free using super income, this would be a good thing.
Yes - that is certainly my intention. And yes, you can borrow money within a SMSF.
Hi
One of the bonuses of buying property with Super a few years before your retirement is that the SMSF has beeter serviceability because of the 9% contributions from your employer. While your extra personal contributions (if applicable) also increase your serviceability I know from experience that the banks like to see that the extra 9% will be paid for a few years to come.
Alysha
www.gatherumgoss.com
One of the bonuses of buying property with Super a few years before your retirement is that the SMSF has beeter serviceability because of the 9% contributions from your employer. While your extra personal contributions (if applicable) also increase your serviceability I know from experience that the banks like to see that the extra 9% will be paid for a few years to come.
Alysha
www.gatherumgoss.com
Geeze, which rock have you been hiding under
google "SMSF borrowing" and you'll get a world of information
And yes, I do plan to buy IPs in my SMSF - lots of asset protection in there.
I am 47 and like others here want control over my assets during the accumulation phase. Like BV I too am not sure about locking in property into SMSF at this stage but think it makes sense just before retiring or slowing down. My questions to the SMSF gurus are can you set up a SMSF at say age 59 then rather than buy assets, transfer existing assets, refinanced with Warrants etc if needed and enjoy the benefits post 60 (big assumption that the Govt doesn't move the goal posts)
I'm 47, too. I've just set up a SMSF and over the next year or so will build the balance to a level that will support some property investment.
I'll still pursue my "real world" investment strategy, but I like the idea of having some property in the SMSF to take advantage of some of the benefits. I can draw a tax free income stream from the fund when I'm 55, but plan to not be working the day job LONG before then.
I'll still pursue my "real world" investment strategy, but I like the idea of having some property in the SMSF to take advantage of some of the benefits. I can draw a tax free income stream from the fund when I'm 55, but plan to not be working the day job LONG before then.
asset protection is the big appeal for me
Can you explain what 'refinancing with warrants' means?
Just don't count on KRudd not changing the super rules regarding tax-free over 60 etc.
He's already planning to dismantle share dividend imputation.
Just wait till the budget has to allow for the interest on the 100 billion plus he has borrowed in the past year. As the country's credit rating goes down, the interest rates go up, as has happened in Queensland lately with the State government.
Marg
He's already planning to dismantle share dividend imputation.
Just wait till the budget has to allow for the interest on the 100 billion plus he has borrowed in the past year. As the country's credit rating goes down, the interest rates go up, as has happened in Queensland lately with the State government.
Marg
If you are asking how you borrow using warrants then its about borrowing to invest into property through a SMSF using an instalment warrant, which is internally geared. and your personal borrowing capacity is not affected as the loan is taken out within superannuation it is not recorded as a liability against your name and therefore your borrowing capacity for investing or business interests outside super are not affected.
The SMSF makes the first instalment of around 30% deposit plus stamp duty/ legal costs plus and the balance of the purchase price of the property is made up by a limited recourse loan. The property is held on trust until the final instalment is made or the property is sold. The SMSF then receives all income and capital growth while paying all the interest and associated costs.
Alysha
www.gatherumgoss.com
The SMSF makes the first instalment of around 30% deposit plus stamp duty/ legal costs plus and the balance of the purchase price of the property is made up by a limited recourse loan. The property is held on trust until the final instalment is made or the property is sold. The SMSF then receives all income and capital growth while paying all the interest and associated costs.
Alysha
www.gatherumgoss.com
Near to this age I would use a SMSF to purchase un-encumbered and high yielding commercial property (definitely not residential property though).
re. SMSF and borrowing, in particular with a warrant strategy...I wouldn't go near it with a barge pole, and all the independent un-biased professional views I've obtained on this subject matter confirms this.
So I am surprised that there are some ''trailbazers'' here already using this strategy.
re. SMSF in general, I think once you're over 50 (or even earlier than this), you'd be silly to completely discount it is as part of your overall investment strategy.
It is far and away the best investing structure as you approach this age and beyond.
Having said that...I'm yet to reach 30, what would I know!
Hi Papps, I've just transferred a small commercial property to smsf. Stamp duty can't be avoided & there's CGT as well.
In my case, it's brought my taxable income down to the point where I'm classified a 'low income earner' and I'm rather amused that there's a $750 rebate for it. I never knew that such a thing exists.
I've been thinking of another way apart from transferring. Have you looked into the numbers of borrowing using the unencumbered commercial property as collateral and then put the cash into smsf? [it can be used to buy equities or property] What about capitalising the interest on the LOC for 5 years while the smsf grows?
The tax benefits can be considerable. Pay 7% to save 8% That to me is free money.
KY
In my case, it's brought my taxable income down to the point where I'm classified a 'low income earner' and I'm rather amused that there's a $750 rebate for it. I never knew that such a thing exists.
I've been thinking of another way apart from transferring. Have you looked into the numbers of borrowing using the unencumbered commercial property as collateral and then put the cash into smsf? [it can be used to buy equities or property] What about capitalising the interest on the LOC for 5 years while the smsf grows?
The tax benefits can be considerable. Pay 7% to save 8% That to me is free money.
KY
Got to love that. I got a low income offset last tax year, too. Mate of mine even gets a health care card.
Who says the tax system needs an overhaul. Seems to be working just fine .. just fine .. just fine ...
We're planning on buying IP's in Super , unless there are significant changes in the next budget.
We have our own super fund and it's gone up in the last year .
All in cash ....
Cliff
We have our own super fund and it's gone up in the last year .
All in cash ....
Cliff
