For many Australians, owning an investment property inside their Super Fund is one way towards building a better retirement, but how do you know if this strategy is right for you? Changes made to the Super Laws in September 2007 added more options for Australians looking to invest in direct property via their Self Managed Super Fund (SMSF). In fact, research shows that as at 30 June 2010 there was more than $58,411,000 worth of property inside Australian SMSF’s (an increase of 70 per cent in 3 years). What makes owning bricks and mortar this way such a Super option? Let’s look at a case study to explore the benefits in more detail. Meet Bob. Bob is 57; he is ready to sell his SMSF-owned investment property to fund his retirement. Bob’s property (bought for $340,000, eight years ago) is now worth $520,000. The capital gain on the property is $180,000, which would be reduced by the one-third discount—a benefit of SMSF tax rules—because it has been owned for more than 12 months. The tax payable would be $18,000 (15 per cent x 2/3 x $180,000). Bob sought advice from a Specialist SMSF Adviser, who recommended starting an allocated pension before selling the property so that the capital gain would be completely tax free. Compare this with paying tax of up to $41,850 (46.5 per cent Marginal Tax Rate x $180,000 x 50 per cent discount for holding the asset more than 12 months) had Bob owned the property personally, and sold it outside of the Super environment. The benefits of investment property ownership via an SMSF can be substantial, but there are many risks to avoid and rules to follow. Having a team of specialists (Property, Lending and Wealth Advice) to help you work out if this strategy is right for you is the key to success. If you would like to learn more visit our web page cr.com.au or e-mail me at [email protected] Happy reading.