Usually, only a property that is wholly and exclusively used in one or more businesses is able to be transferred to your own SMSF. For example, if you were in possession of a residential rental property, you would not be able to move it into your super fund.
A question often asked by trustees is whether they can sell an existing rental property that they already own to their super fund. The answer to this is a resounding NO. A SMSF cannot buy property from a related party. That is a trustee or various relatives as defined in the SIS Act.
Therefore, by 2023, if you sold an asset such as an investment property and made a capital gain, you could contribute your rolled over amount directly into your superannuation and qualify for a tax deduction – offsetting the CGT on your asset sale.
Living in a property owned by an SMSF, says Fry, is prohibited until you retire, at which time the property can be transferred to you as members. An important condition before this can happen is that you need to have reached an age when super rules allow this to occur.
Adding to super before tax
You can contribute up to $27,500 each year. These are contributions you have not paid any personal income tax on. They are called 'concessional contributions' because the concessional rate of tax paid on super is 15%.
Understand how much you can contribute
These limits are called 'contribution caps'. You can contribute up to $110,000 each year in non-concessional contributions. If you have more than one super fund, all your contributions are added up and count towards your caps.
How much can I contribute? The maximum you can contribute is $300,000 or the sale price of your home, whichever is less. You may make more than one contribution, but the total must not exceed this maximum.
You can access your super when you: reach your preservation age and retire. reach your preservation age and choose to begin a transition to retirement income stream while you are still working.
If in a good area with good tenants the property may very well outperform the super fund, but you are talking on additional risks by putting a substantial amount of money in just one investment and not diversifying.
In general, after you've reached your preservation age and satisfy a condition of release, you will be able to access all of your super to pay off your mortgage. If you're still below your preservation age, you'll only be permitted to access super funds which are unrestricted and non-preserved.
How long do you have to live in a house to avoid capital gains tax in Australia? To avoid CGT, you'll need to live in a property for twelve months for it to be counted as your main residence before you can move out and use it as an investment property.
Another way to avoid or reduce CGT is by increasing your property's cost base. This is the cost of acquiring, holding, and disposing of a property, and is subtracted from the selling price to give you your capital gain. According to the ATO, the cost base of a CGT asset is made up of: The money you paid for the asset.
Your SMSF's assessable income includes any net capital gains, unless the asset is a segregated current pension asset. Complying SMSFs are entitled to a capital gains tax (CGT) discount of one-third if the relevant asset had been owned for at least 12 months.
The nominal transfer duty payable is $500. This provision requires that the transferor is the sole member of the SMSF, or that the transferred property is held solely for the benefit of the transferor (s62A(3A)).
Members of a self-managed superannuation fund may wonder if they are required to pay stamp duty on their SMSF. SMSF trust deeds are generally stamp duty-free.
A Member being able to contribute amounts up to a lifetime limit of $1,650,000 (for the 2022 year) from the sale of assets qualifying under the small business capital gains tax (CGT) concessions.
Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.
Exceeding your cap means that: the excess concessional contributions amount is included in your assessable income. this amount will be taxed at your marginal tax rate.
You can contribute to your super at any time up to age 74, even if you're not working. If you want to claim a tax deduction for your personal contributions you'll need to meet the work test, or work test exemption rules.
The minimum amount that can be withdrawn is $1,000 and the maximum amount is $10,000. If your super balance is less than $1,000 you can withdraw up to your remaining balance after tax. You can only make one withdrawal in any 12-month period.
This obviously depends on what annual income you want to fund but if you want to be able to afford a comfortable retirement—which is an income of just over $48,000 a year for a single according to the ASFA Retirement Standard—then you need a balance of at least $500,000.
Super guarantee (SG) increase
From 1 July 2023, the super guarantee increases from 10.5% to 11%. Further increases of 0.5% are scheduled each financial year until 2025 when the rate reaches 12%.
As a general rule, most people will need 70% of their take home pay to maintain their lifestyle in retirement. And since we're living longer, which is great, your super may need to last for 30 years or more after you retire.
You typically pay 15% tax on your super contributions, and your withdrawals are tax-free if you're 60 or older. The investment earnings on your super are also only taxed at 15%.