Did you know that recently near 50% of DDP Clients are using their superannuation to buy property?
Superannuation is often an untapped resource. More awareness is surfacing around the benefits of using your super to buy property. In essence, how you manage your superannuation will determine your retirement lifestyle.
Unfortunately, Australians typical disregard their superannuation, not realising that it will either be their largest or second largest (own home) lifetime security.
As finance guru Robert Kiyosaki says: “Always remember that your future is determined by what you do today, not tomorrow.”
No out of pocket personal expenses
At first, most of our Clients shy away from using Super to buy property, until we run through the benefits and explain how all fees are taken from their existing super balance, meaning NO OUT OF POCKET EXPENSES keeping your personal savings out of it to get started.
The SMSF (Self Managed Super Fund) set up fee by most finance providers is around $4K, this cost and the DDP service fee is taken directly from your super.
CASE STUDY: Superannuation Fund vs. SMSF
$900K OR $6 MILLION – which would you prefer?
Scenario 1 – an individual aged 35 with a super balance of $120K leaves his superannuation in his super fund and it continues to grow at a rate of 5% per year. At retirement, he is left with $900K *
In Scenario 2 – the same individual uses his super to purchase a property in Sydney for a purchase price of $400K. He buys the property at the age of 35 via a SMSF. At retirement age 75 with the average appreciation of 7% , his property is valued at $6.0 million*
The reason for the dramatic difference between the 2 scenarios is due to capital increase. The Capital increased is measured by the difference between the current market value of an investment (ie at retirement) and its purchase price.
In scenario 2, the person is borrowing 80% of the property value of the purchase price (i.e. $400K). Thus, his capital appreciation is on the $400K as opposed to appreciation on the $120K in scenario 1.
Other benefits of SMSF
Tax benefits – A super fund’s tax rate is 15%. This means if your property has a net positive cash flow of $20,000 per year, inside a SMSF you would only pay $3,000 in tax. However if it was purchased in your own name, it would depend on your marginal tax rate, however your average tax would be anywhere between $7,000 to $9,000.*
Combining super with friends/family – You can combine your superannuation balance with other people – this can be with friends, family* This works particularly well when your super balance is too low to buy a property on your own.
DDP has helped hundreds of people successfully buy property using their super.
Don’t forget, any brand-new house & land property purchase will also receive up to $35K CASHBACK.
Contact us today to book your personalised appointment and get your super working for you.