Will 2012 be a ‘Super’ year for you?

18 January 2012

It seems that almost every 2nd person I speak to about property investment at the moment has questions about whether they should be buying in the name of a self-managed superannuation fund (SMSF). It’s certainly a topic that’s on everyone’s lips at the moment. So while I’m not a financial advisor, I thought I’d share a few thoughts with you from a property perspective.

Firstly, given the way the share market has performed in recent years, there are certainly some very good reasons to be looking at property as a way of securing your financial future, particularly with the long term prospects in mind. Recent data says that there are now close to 450,000 SMSF’s in Australia with close to one third of this country’s total superannuation savings.

More importantly, the Tax Office has made owning property in a SMSF easier of late, so an increasing number of Australians are now looking closely at this option. About five years ago the ATO made the move to allow SMSF's to borrow to invest in real estate. More recently they eased the rules to allow for improvements to properties held within SMSF’s as long as it increases the value of the investment and it does not change the fundamental nature of the property.

Whilst there is little doubt that these changes have made investing in property through a SMSF more appealing, as well as raising interest in the SMSF option itself, it is very difficult to get reliable numbers on how many SMSF’s have invested in real estate. However, anecdotal evidence would indicate that the numbers are rising as time goes by. After all, when you look at falling interest rates and falling share markets, the question then becomes “Where else CAN we put our money and still be able to sleep at night?”

From my own perspective, I am seeing more and more clients choosing to take control of their superannuation funds by setting up their own SMSF’s then making the move into property. As I have emphasized in the past, it is vital that you seek independent financial advice before going down this path, but a SMSF certainly does look like an excellent way to secure additional property in a tax effective way. Perhaps asking your advisor about this option is something you should consider?

Cheers

Bertram

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