property investment

Many Australians don’t realise how much of an impact their investment choice can have on their retirement. If you are looking for some aid to make the right decisions, this is the right place. This article will briefly guide you about the SMSF property investment.

Capital growth

Capital growth can be defined as the increase in the value of an asset. Capital growth is one of the main reasons people invest in property, and it’s one of the key benefits that can be enjoyed by investors who choose to purchase investment properties through their self-managed super fund (SMSF).

The ability to enjoy capital gains largely depends on location and market conditions.

Rental income

Rental income is the money you earn from letting your property to tenants. It can be a good way of making extra cash, but it’s essential to understand how it works before deciding whether or not to invest in rental properties.

The first thing you need to know about rental income is that it’s taxable. However, there are two ways this can work in your favour:

  • Rent received from an investment property is tax-free up to $20,000 per year (CPI has indexed this amount since its introduction). This means if your rent is less than $20k per year, then any amount above that will be fully taxed in the hands of the SMSF member who owns the property and managed super funds trustee on their behalf.
  • Rental income may also offset other types of income within an SMSF member’s tax return for up to four years after they bought their investment property (this rule was introduced in 2013).

Tax deductions

Tax deductions and tax credits are not the same, although they may appear similar. The benefits of one option can far outweigh those of another.

Deductions are taken from income earned through a business or property investment. They reduce taxable income on your tax return, which means you pay less tax overall.

A deduction is worth more than a tax credit in two ways: firstly, its value isn’t capped at $1,000; secondly, it reduces your taxable income rather than increasing your refundable amount (excess contributions). 

This means that depending on where you sit in income and marginal tax rates during the year, you could receive up to 40 cents per dollar deducted from your taxable income – this is compared to 17 cents per dollar for most credits!

Tax benefits

If you’re an SMSF member, you may be able to claim a tax deduction for the interest on your loan and the mortgage.

You may also be able to claim a tax deduction for depreciation (the cost of using or wearing out an asset) on the building itself. This can include:

  • Repairs and maintenance costs
  • Capital works deductions for buildings constructed by you or family members about other assets owned by your fund (such as adding an addition or renovating). The cost of this must be included in your SMSF’s operating statement.

Tax-free retirement pensions

With an SMSF property investment, you can also access tax-free retirement pensions. A pension is a form of long-term savings plan that allows you to withdraw funds from your superannuation account throughout your lifetime, meaning that it’s not subject to taxation.

An SMSF property offers some unique benefits, which could be a great investment option. Investing in it has a lot of advantages. That’s why it is a good option to consider if you’re looking for an investment opportunity.

It can be a great way to save, but it offers other benefits that you might find appealing!


This article briefs about the useful and insightful benefits of an SMSF property investment. Property investing is a great way to build wealth, but it isn’t for everyone. 

If you think such property could be right for you, you should speak with an accountant or financial advisor who can help walk through the process of setting one up and ensuring it will work best for your needs.


Similar Posts