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SMSF and investing in property

While using a self-managed super fund (SMSF) to buy an investment property has become increasingly popular, members must carefully consider whether it supports their overall investment strategy before they go ahead with this investment approach.

There is a condition that the SMSF trustee or any of their relatives cannot buy the property with the intention to live in it. The sole purpose of using an SMSF to buy a property must be to build wealth for retirement. With this in mind, a member must buy an investment property for logical reasons and not because they are emotionally attached to it. The importance of the property’s return on investment outweighs the property’s views and facilities.

Before purchasing an investment property, a SMSF member must evaluate how long it will take them to repay the debt. Current rent rates and the level of superannuation payments made by members should provide an indicator of whether it will be paid off in time for retirement. Otherwise, they may need to factor in selling the investment at the time of retirement or putting off their retirement.

Members must also take into consideration that some investment properties are more suited to a SMSF, such as properties with low ongoing and maintenance cost and a high gross rental return. They should avoid buying investment properties with high ongoing maintenance cost as these will only increase unnecessary costs and reduce the net rental income.

Posted on 26 May '15 by , under Super.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
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  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
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  • Details of your previous fund.

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