Gus and Gina are hard workers and have run a successful business for a number of years. They’ve paid themselves super along the way but have never contributed extra as they aren’t comfortable with shares and the volatility of stock markets. They have always reinvested into the business and have taken very little in profits for themselves. Over time, the business grows and they now need to find larger premises to work from. Gina has read something about people using their superannuation to invest in property and they come to see us to find out if this is a possibility for them.
We explain to them that they can indeed use their super to purchase new premises and then lease this back to their business. In fact, should they be a little short their super fund can borrow the rest – subject to some very strict rules that must be followed without exception. There are additional advantages to Gus and Gina buying the property through their superannuation fund, rather than in their personal names, as the rent is only taxed at 15% and the capital gains from selling down the track can be as low as 10% – or possibly nothing if they sell at retirement subject to certain conditions.
For Gus and Gina. this is a win-win solution as they can expand the business and at the same time invest in what they believe is a quality investment for their super fund and their retirement.