THE $530 billion squirrelled away by mums and dads in self-managed super fund has never had much exposure to real estate, nothing they need to lose sleep over
until the government changes the rules.
Australian governments of all persuasions have long had a frustrating habit of changing the rules on superannuation as frequently as most of us change our clothes.
Well, they're at it again, but at least this time it's something that is positive for property investors.
The Coalition government's decision this month to axe Labour's plan to slap a tax on superannuation pension earnings above $100,000 appears on the surface to benefit rich retirees, but in reality is a nice boost for the growing army of self-managed super fund members who are buying real estate in their funds.
Financial advisers say the axed tax would have been extremely difficult to collect, and any high-earner with a decent financial planner would have been able to use advanced strategies avoid paying it, leaving the average Aussie who buys a property in their SMSF with the biggest financial hit.
That's because property is a large asset that can't be sold in pieces like shares can. So under Labor's system, someone who bought a $500,000 investment property in their SMSF and sold it for, say, $2 million 20 or 30 years from now would have been hit with a tax bill of around $200,000.
Axing Labor's plan, as the Coalition has done, means super pensions keep their tax-free status, so the property-investing SMSF member pays zilch.
There are now more than 500,000 SMSFs in Australia, holding more than half a billion of assets, and a fast-growing proportion of that is residential property.
The latest changes are good news for them, but are unlikely to be the last lot of changes we see to super, so it's worthwhile not putting all your eggs in one basket, especially if they are shiny, golden nest eggs.
People thinking about buying property within an SMSF have also been warned recently about the dangers posed by property spruikers, rip-off merchants and so-called advisers willing to "help" them out. That's probably just as big a threat than any government tax changes, as a bad property deal can cost a fortune.
The government will always change the rules. You will always change your clothes. Just be careful you don't lose your shirt.