Our firm recently attended a high level seminar about SMSF’s and Strategies for Super and I wanted to share with you the results of a most interesting case study.
The study compared the after tax profit of buying, owning then selling an investment property, in an individual’s name versus a SMSF, over a 10 year ownership period. A comprehensive list of assumptions about various factors and rates during the life cycle of the transaction were made, and the comparative calculations included negatively gearing tax benefits and capital gains tax rates on sale. We thought all of the assumptions were reasonable and pretty standard. The results were quite unbelievable:
1. SMSF ownership gave a 47% better return if the property was sold before retirement.
2. SMSF ownership gave a 59% better return if the property was sold after retirement.
The main negative of having investments in Super, is that you can’t sell them and then use the cash to spend personally or pay off the family home, the cash must be kept in the fund for further investments and/or to provide retirement funds. If however, you can get over that issue, and are investing for the long-term, Super has huge wealth creation advantages. I am personally buying all property, that has a long-term vision, inside my SMSF from now on.
We are becoming experts in this space so please feel free to contact us if you would like any advice or assistance in this regard. We are independent advisors meaning you select your own property (residential or commercial), and we then put the best structure, compliance and finance in place for you.