Home' API Magazine : November 2014 Contents 46 n APIMAGAZINE.COM.AU n NOVEMBER 2014
“If you move out, you have to be able to
rent it for that amount of money,” she says.
“Watch out for people promising big bucks.
It doesn’t happen.”
n4. FORCED SAVINGS
If you own a SMSF, you’ll only be able
to gain access to your super when you
reach ‘preservation age’ and meet one of
the specified conditions for release, such
“ There are very limited circumstances, such
as death or a terminal medical condition,
where a member’s super can be accessed
before this,” the ATO says.
“ There are significant penalties for
unlawfully releasing super benefits.”
In a way, it’s a good thing. It’s forcing you
to save for later in life. In a world of instant
gratification, it could guarantee you have
money when you’ll need it most.
However, Brian-Wheatley says it’s
important to understand that money in a
SMSF is completely different to money in
your personal bank account.
“It’s like a bubble and you can’t touch that
money in the bubble,” she says.
“If you take money out before then,
you’ll lose, because you’ll pay (up to) 48
cents in the dollar. Whatever you build
within a SMSF can’t be used for holidays or
n5. LAND TAX THRESHOLD
Properties within a SMSF have their own
land tax threshold. It varies from state to
state but it could save you big bucks, if you
already own numerous properties in your
own personal name in one particular state.
“Even though the property is acquired by a
holding trust, it still gets the threshold, either
because it’s a super fund, or the state sees it as
a fixed trust,” Raiss says.
Beeton says if you already own a large
number of properties, you might be able to
save yourself thousands of dollars each year
by purchasing through a SMSF.
“If you go over the threshold it could cost
you a few thousand each year (and varies
on a state-by-state basis). If you purchase
a property in a SMSF it means the tax
threshold would change.”
n6. YOU CAN CONSOLIDATE
If you have others in the family keen to build
a portfolio, it’s possible to consolidate your
money into a SMSF. You can have as many as
four people – enough for you and your three
“You can use what might have been ‘half-
idle’ money and actually purchase property
with other people in your family, as long as
you all stay friends,” Raiss jokes.
n7. YOU CAN WORK LESS HOURS
If you’re older than 55 and sell property
within a SMSF, you might be able to draw
money out using a transition to retirement
(TTR) scheme. This allows you to take
money out and use it for whatever you want.
Brian-Wheatley has actually done a few
developments with the help of a TTR.
She explains her husband was born before
1954, so he can draw out up to 10 per cent of
money within their SMSF, as a TTR.
“We then use that money for developments
in our NSW land tax unit trust,” she says.
See the breakout box above for more
information, which shows how this complex
rule could potentially go a long way to help
you cut down your work hours.
However, like all things in a SMSF, make
sure you always check with an accountant.
n8. YOU HAVE CONTROL
Sandkuhler says the benefit of a SMSF is that
you have more control over what happens to
your retirement nest egg.
“You have the capacity to buy direct
property and direct shares,” she says.
“ The advantage and freedom of a super
fund is that it puts the trustee in the
driving seat versus a fund manager in the
“ The advantage of owning a leveraged
property means you can also increase the
total value of that super fund.”
She adds as a trustee, you’re responsible for
failure or success of the SMSF’s investment
strategy, so it’s important to seek independent
and unbiased advice when it comes to what
type of property to buy, and where.
Beeton adds most people reading API
magazine would obviously be big property
lovers and have plans to build a portfolio.
They might consider shares a risky strategy,
because they have less experience or
knowledge about them.
n9. OFFSET ACCOUNTS
Sandkuhler says a couple of lenders have
just started to allow the set-up of offset
accounts, as part of the SMSF property loan
structure. Not everyone knows about this,
but it’s something that could go a long way to
helping many property investors.
“You can’t redraw equity out of a primary
asset but if there’s an offset account you have
the ability to put money into it and withdraw
it for future investing within the fund,”
“Only a couple of lenders will do it.”
If in doubt, check with a specialist
n10. LOTS OF HELP – FOREVER
While it sounds complicated and somewhat
confusing, Brian-Wheatley says a good
accountant will be able to guide you through
a SMSF. Even though the structure is
complicated, a SMSF can be rewarding.
The ATO is also ‘amazing’ and helpful.
“I ring them up, I hound them. They have
great and amazing websites,” she says.
And finally, a SMSF will always be there.
Even if you’re 45, chances are you’ll now
live until you’re 75, Sandkuhler says.
“You start getting exponential growth
after 10, 20, 30 years, so it makes a massive
difference to hold the property within the
SMSF for a long time.” API
This information is of a general nature only and does not
constitute professional advice. You must seek professional
advice in relation to your particular circumstances before
acting. This information is also to be read subject to the
disclaimer on page 6.
DID YOU KNOW?
TTR allocated pension
Gross assessable income
Take home pay
There aren’t just benefits with putting
money into a SMSF.
There are also benefits with taking
In fact, it’s actually possible to cut down
your working hours while maintaining the
same level of income using a SMSF.
Brian-Wheatley is a big fan of selling
a property, then putting the money into
a SMSF, and later taking it out through
what’s known as a transition to retirement,
If you’re over 55 and you earn, say,
$75,000 a year, it’s possible to cut back
from 35 hours a week to just 25 hours,
which would reduce your salary from
$75,000 to $53,500.
By using the TTR strategy, you can
maintain your after-tax income, despite
reducing your working hours.
But it does come at a price – your super
will dwindle over time as you continue to
draw down your pension payments.
However, this strategy isn’t for everyone,
“I wouldn’t encourage anyone to take
money out of their super, unless it wasn’t
touching their capital and was only a
rental, or they were investing in passive
income assets outside their super fund,”
“You don’t want your super fund
dwindling at all.”
COVER STORY n Super Wealth
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