subject: Being An Smsf Member Can Help You Buy Property [print this page] Investing in the properties is a very lucrative option for many people. In such a scenario, many people who are in the stage of getting their superannuation benefits tend to know the myriad ways that they can invest in real estate properties. Being an SMSF member or the self managed super fund can bring in quite a lot of benefits. Irrespective of the fact whether the property is residential or a commercial one, there are diverse ways that one can invest in them.
Buying it out upfront:
Buying the marked property of your choice is the best and the most recommended way. It is highly suggested that the property should be under a trustees name of SMSF. In this way, the title and property deeds are held on his name and there will be no references as well to the unit trust structure of the fund as well. The greatest benefit is that there are guaranteed tax concessions on the income and other future gains especially pension. The noted disadvantage is that as an SMSF member, you need a lot of liquid cash to seal the deal.
Common Tenants:
Being an SMSF member, you can own a property in conjunction with another member, individual, trust etc. The only factor facilitating the entire step is the condition that no person can claim the property or have any dues etc pending against the property. In short, the property must be free of any allegiance to anybody. One of the benefits in this method is that when the unit trust structure of the fund does not have enough capital, one can go ahead and invest in a real estate property with other investors. The disadvantage here is that there should be 100% surety of the other party being ready with the cash so that liquidity is not a problem.
Geared or ungeared Unit Trust:
In this method of unit trust structure of the fund, there are certain rules to play by. This is a more typical way that an SMSF member can invest in a real estate property along with another investor. The SMSF as a fund would also subscribe for a few units along with the other investor or investors. Normally, the ATO does not rule in favor of the SMSF trust to behave like a business company. Hence, the fund is strongly recommended to make an investment in the unit trust structure of the fund. This is advised as the trust does not fall under the jurisdiction of the rules governing superannuation benefits.
These ways are suggested keeping in mind the comfort of the member of the fund as well as to protect his interests in the real estate deals.
by: manojabichandani
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