Australians have an attraction with investing in the property market, which is less volatile than investing in shares and has delivered significant investment returns in recent years. However, the funds required to purchase property are relatively high.
Therefore, can one invest in property without using their personal cash/savings?
Self-Managed Superfunds (SMSF) have become increasingly popular as a way for Australians to take control of their retirement savings and invest in a variety of assets, including commercial & residential property.
Investing in commercial or residential property through an SMSF can provide a number of benefits, including the potential for higher returns and the ability to diversify the fund's investment portfolio.
One of the main advantages of investing in property through an SMSF is the potential for higher returns over the long term compared to traditional investments such as shares or term deposits. Property investments can also generate income through rent and capital appreciation, which can provide a steady stream of income for the SMSF's members.
Additionally, commercial properties are often leased to established businesses, providing a degree of security for the SMSF's investment.
Another advantage of investing in commercial property through an SMSF is the ability to diversify the fund's investment portfolio. Diversifying investments can help to spread risk and potentially increase returns over the long term. By investing in a mix of assets such as shares, property, and fixed income, an SMSF can reduce the impact of any potential downturn in any one asset class.
Investing in commercial property through an SMSF also comes with some challenges and risks. SMSFs are subject to strict rules and regulations set by the Australian Taxation Office (ATO), and failure to comply with these rules can result in hefty fines and penalties.
Additionally, investing in commercial property can be a complex process, and SMSF trustees need to be aware of the legal and financial obligations involved in owning and managing an investment property.
SMSF trustees need to ensure that any property investment is made solely for the purpose of providing retirement benefits for the fund's members and not for personal use by the funds members.
The above article is general in nature and if you are interested on how we can help you benefit from purchasing real estate using an SMSF, please contact our office on 03 9863 6997 and talk to our SMSF specialist.
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