Munro Accountants – Breathe easy in 2010 with your new super strategy

Traditionally investment properties have been owned by mums and dads, negative gearing and minimising taxes along the way. But the sting in the tail with that strategy has been when the property was sold. The capital gains tax that applied far outweighed any tax advantages received along the way.

The most tax effective structure is one where all taxes are minimised throughout the whole investment. And one that can pay for itself, preferably.

A self managed superannuation fund is such a structure. But until recently, superfunds couldn’t borrow.

Well the borrowing rule is here and it’s been working effectively. The most innovative rule change to come to the superannuation environment for a long time is the ability for a superfund to borrow.

With Australia’s love for property investment, this has revolutionised the investment property market. Many people have found a breath of fresh air to utilise their own superannuation monies for property investment.

And even though initially it was thought to be quite costly to borrow through super, the products available have become cost effective.

The negative gearing can be claimed along the way, but the major benefit is when the property is sold. Provided the property is owned for more than 12 months, the maximum capital gains tax rate is 10%. And for some superfunds it can be just as little as Nil%.

You can’t ask for a lower tax rate than that.

And your superannuation contributions can pay for the property. For some this could be compulsory monies that are contributed, or for others you can voluntarily contribute monies.

If you would like to know more about the set up of a self managed superfund or the use of purchasing investment properties through such a structure, then contact Michelle Gargar or Rob McAskill on (07) 55399777 or email theteam@munro.com.au