Property looks attractive to SMSFs
While the allocation to cash has become more popular among self-managed superannuation fund (SMSF) trustees, so too has the interest in property signalled a growing trend in the industry, according to the SMSF Academy.
Referencing the latest Multiport Investment Patterns Survey, the academy stated that the overall increase in allotments to property of 0.8 per cent over the December 2011 period reflected increased certainty in the strategy following the clarification of the limited recourse borrowing rules by the Australian Taxation Office in September 2011.
"Add to this the clarification on what qualifies as a single acquirable asset and I think we will see more trustees more comfortable with the strategy and therefore a much broader range of investors looking to acquire property through a SMSF this year," said SMSF Academy managing director Aaron Dunn.
Dunn said the attraction to property in an SMSF is significant, particularly when considering the tax exemption afforded on any capital gains once trustees reach retirement phase.
Given the uncertainty surrounding the equity market, having the ability to source two streams of inflows (rent and contributions) would help to accelerate repayments and maximise returns, Dunn added.
While there are benefits in holding property through SMSFs, Dunn said property requires regular analysis and trustees needed "to connect the inflows and outflows to the internal rate of return calculation".
Exiting the strategy at an optimal time would help to maximise return, he said.
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