Q – I have heard my superfund can actually borrow to purchase property, is that possible?
A – Yes, that is correct. Since 2001 super funds can borrow to purchase property. Approximately up to 70% for residential, 65% for commercial and 605 for rural. However, there is a certain criteria that needs to be followed and the first instance you need to set up a self managed funds complicated, it is relatively easy and you simply employ a relative accountant or qualified professional to set up the correct structure for you.
Q- What is the advantage of setting up my own super fund?
A – if you are one of the unfortunate individuals who lost up to 40% off your superfund and still paid fees to your respective superfund manager to handle your affairs over the recent financial crisis, then you will know first hand why it is important to control your own fund. You decide where the superfund invests, how it is funded and how it operates. For long term investors, this is a great method to create real wealth. SMSF are the fastest processing sector currently due to the disenchantment and the awareness of many investors, particularly in the baby boom generation.
Q – I own an investment property but built 5 years ago (I’ve owned for 2 years) can I claim any tax deduction?
A – you certainly can. it’s a seldom known fact that millions and millions of tax dollars are lost each and every year because owners fail to claim depreciation. Generally a building qualifies for two and a half percent straight line depreciation on the cost of the building every year for 40 years. For example, at $500,000 purchase may have a building component of $400,000 which equates to $10,000 a year tax deduction or nearly $200,000 back in your pocket over the life of the investment (based on the top tax bracket). Then there is a higher and accelerated allowance for items such as carpet, furniture, hot water systems, air conditioners etc. If you are not claiming deprecation on either of these, you can employ the service of a quantity surveyor to compile and up to date and current depreciation schedule for the cost of approximately $500 - $800, you will earn this back many times over and of course the fee is tax.