Women In The Black

Why Set Up A Self Managed Super Fund

Why Set Up Your Own Self Managed Super Fund
Pros
  1. Allows you to invest directly into residential and commercial property.
  2. Use the money in the SMSF as a deposit and borrow to buy investment properties that grow in value.
  3. Can be more tax effective to buy property through an SMSF rather than buying one outside super.
  4. Rental income is taxed at the superannuation tax rate of 15 per cent compared with your marginal tax rate.
  5. Once you retire there is also the possibility that the SMSF can pay you a pension tax-free.
  6. When the property is eventually sold, capital gains are effectively taxed at 10 per cent (if owned for more than 12 months) and can potentially be tax free if the pension period has started.
  7. YOU’RE IN CONTROL. Asset allocation, tax strategies, insurance options and retirement planning – it’s all up to you.
Cons
  1. Usually involves thousands of dollars in establishment costs and sometimes there are higher fees involved in borrowing to buy property through a SMSF.
  2. Annual costs of running a medium-sized fund estimated around $2,000.
  3. Management is complex and is not for everyone – SMSF members tend to be older, have a higher income and larger super balances.
  4. Usually not advisable if the fund assets are likely to be less than $200,000.
  5. The right financial advice and support can make it easier.
  6. Critical to seek independent advice from a qualified financial advisor to ensure that a SMSF is appropriate for your circumstances, and that you set up things correctly to satisfy the ATO.
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