SMSF can help save tax payments on capital gains

Self-Managed Super Funds (SMSFs) are making headlines and for all the right reasons too. Kate Farelly in one of her more recent articles suggests how property investments in SMSFs are increasing by the day. Investors are wary of managed-funds are not willing to put their money in share market either despite its steadiness (old memories are playing on their minds).

Investment in SMSF can save on 15% of tax that is otherwise incurred on capital gains and rental income. If you can hold your property till the superannuation phase, you are exempted from paying any tax at all. Of course, there are disclaimers- 1) none of your friends or family should live in the family. 2) You cannot perform Home Staging on the property with borrowed funds.

If you are in your youth and looking to improve on your asset base, SMSFs may not be your best bet, argues Farelly. After all, the working legislation in this country does not permit refinancing and subsequent equity building for the task of purchasing new property.