How to Get an Increase in Property Rental Returns with a SMSF

How to get an Increase in Rental Returns with a SMSF

With an SMSF there is an opportunity to maximise the rental yield of a property investment using the generous tax concessions available to SMSF’s. The tax advantage of superannuation is the concessional rates of tax on earnings. During the accumulation phase a super funds tax rate is 15% on any investment earnings such as rental income. Post retirement age at 55 (if you were born before 1960)  for example the tax rate in Pension phase on earnings is currently NIL. The age of retirement will depend on when you were born, so check with your adviser to find out the age that applies to you.

Let?s compare the scenario for an individual who pays 38.5% tax (including medicare of 1.5%) on his/her income vs a superannuation fund. Assume the property provides a rental income of $21,000 per annum.

 Comparison table:




Rental Income



Tax on rental

$8,085 (tax at 38.5%

$3,150 (tax at 15%)

Net Rental (post tax)



Tax saved over 10 years



As you can see from the table a whopping $49,350 in tax is saved over 10 years for the property that was held in a self managed super fund. Of course the main limitation is having access to the funds so one needs to take into consideration a number of factors such as age, retirement plans and other variables that can be discussed with a SMSF accountant or adviser.

Post retirement in the pension phase the tax on earnings is NIL so the full rental income could be recieved by the super find without any additional tax to pay i.e the full $21,000 which in the case shown above would mean a tax saving of $8,085 per annum throughout  the whole of retirement. Another significant tax saving.


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