Many people who embrace DIY super are choosing to escape the sharemarket allocations of retail and industry funds and want to find stable income streams.
Issues to consider when deciding to hold a property in a self-managed superannution fund:
(1) A key benefit of buying property through super is that once you're on a pension, you can sell capital gains tax-free - ''It has to be a properly documented loan and actual funds have to be paid over by the lender,'' says Peter of Townsends Business & Corporate Lawyers. No paper transaction!!
(2) If you or a relative live in a property purchased by your super fund this will breach the ''sole purpose'' test and make your fund ''non-compliant''. ''Some of these smart owner-occupiers [buying apartments at Haven] are purchasing through their SMSF and renting out the apartment,'' Mr Yates says. ''They get to move in during pension phase capital gains tax-free and also sell their family home CGT-free.''
(3) An income stream and a solid capital gain from a super-held property may not always be possible. Best to concentrate on rental income. If someone approaching retiring age holds a property for only six or seven years they may generate little capital gain. ''We are more focused on getting the income into the fund, so the rent goes in with contributions from the employer,''
(4) Think like a tenant when purchasing your investment property. That will be your exit strategy ''You have to look for blue-chip assets that attract the right type of tenant and maximise rental return.'' Ms Monkley agrees that buying something with strong tenant appeal is vital, but favours residential properties in regional centres priced below $350,000.
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