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Smart Retirement Planning Tips: Buy Property after You Retire, and Reap the Benefits

Before superannuations were ever imposed, those who wanted to fund their retirement had to use what they had gained via property ownership. This equity and other wealth was hard won; homeowners back then had to work hard to eliminate their mortgage before retiring years later. Selling the home, downsizing and funding retirement with the equity realized from doing so was commonplace.

But today, seniors wanting to purchase property after they retire are able to do so with the money contained in their superannuation. Since 2007’s rule change to allow money to be borrowed from within a super for commercial or residential property purchases, many seniors have been waiting until after they’ve reached the age of 65 to buy.

How Much Can You Get?

If you are a senior wishing to purchase a residential property, you may be able to get as much as 80% of the property’s value from the investment property bank. Those wishing to purchase commercial property may receive as much as 70% from the bank.

Here’s an example: a $400,000 residential property can receive as much as $320,000 in funding. As long as your super contains the $80,000 difference in addition to funds to cover additional costs, you are all set.

What Is Stamp Duty?

Stamp duty is the tax imposed on the acquisition of property in Australia. Stamp duty must be paid no more than thirty days following the purchase of that property. Many have found the cost of stamp duty to be prohibitive. But there are several exemptions as far as the payment of stamp duty is concerned. One of these is for the pensioner. Anyone over the age of 65 who wishes to purchase property in Australia can do so without worrying about having to pay stamp duty.

Other Financial Benefits

Those who wish to enhance their retirement planning can also wait to sell purchased property until after they retire can completely avoid paying capital gains tax. The same is true if a pensioner earns any rental income after they retire.

There Is a Risk

It is true that those wanting to purchase residential investment property are able to borrow funds from within their self-managed super fund to do so. However, this is not without its risks. Borrowing in this way can magnify the returns on the investment. But it can also mean increased losses should something go wrong. For example, you may lose everything you invested if you are forced to sell your property in a depressed market and received 80% from the bank.

There is much more to retirement planning and investing in property than what you’ve read here. That’s why we’ve prepared an informative eBook for you to download. Or, you can contact us today to get your superannuation and retirement planning underway.

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