OnlineCapital Consulting News and views from OnlineCapital
There are some good points made by Richard Wakelin in his recent article in the AFR:
before we write the obituary for SMSF property investment, it is worth remembering that the practice has managed to survive since the rules allowing borrowing were introduced in 2007, despite a number of challenges.
Not least of the challenges blocking SMSFs becoming a mainstream consumer property investment pathway has been the legal and accountancy complexity that comes with borrowing and buying within an SMSF.
Property within super does have an overlay of complexity, but for firms like us, it is an everyday set-up. And if investment in property is carefully executed it is successful for most.
Buying property through an SMSF can undoubtedly be a risk with a very dangerous impact: there is the capacity to wipe out much of one’s retirement nest egg if second-rate assets are purchased in a highly geared manner. And given the numerous revelations of poor advice that we have heard out of the banking royal commission, it has probably been a blessing – whether intentional or otherwise – that the flow of SMSF funds into residential property has been constricted.
But on the flip side, tens of thousands of SMSF members have accumulated far larger retirement pots today than had leveraged property investment not been available over the last few years, given the comparative over-performance of property relative to most other assets.
Those success stories mean that while property investment via self-managed super funds is struggling, it isn’t yet dead.
