The first benefit associated with this type of transaction is perhaps also the most significant. It is the fact that ‘in-super’ transactions are subject to a much more favourable tax regime. Your after tax returns are therefore likely to be much better. For example:
1. Rental income from property in a SMSF will be taxed at 15%, compared with rates up to 45% that a regular investor could be paying.
2. Once you start to use your SMSF to provide your pension, rental income from the property will be tax free.
3. The cost incurred in purchasing and managing the property (interest, depreciation, rates, insurance etc) could very well produce a negative income that you can offset against other income to reduce your tax even further.