Do I need to sell my rental property (fully paid for) in my Super fund to start withdrawing from the funds on a monthly basis to live on at 60 years of age, or can I keep renting it and just access the rental income?

  • @Brythan - the OP is concerned because the minimum yearly amount withdrawn from super pension may be more than the net yearly rent. – Victor Nov 21 '17 at 12:55

When you start accessing an income stream from your super there is a minimum amount you must withdrawal each year depending on your age. Basically the older you get the higher the percentage of your account balance you must withdrawal as a minimum.

  • Under 65 - minimum 4% of account balance
  • 65 - 74 - minimum 5% of account balance
  • 75 - 79 - minimum 6% of account balance
  • 80 - 84 - minimum 7% of account balance
  • 85 - 89 - minimum 9% of account balance
  • 90 - 94 - minimum 11% of account balance
  • 95 or more - minimum 14% of account balance

So depending on how much your net rent is (after all expenses), will determine whether you can keep renting it out and just live on the net rental income. But obviously, as you get older and the minimum percentage increases, you will need to eventually sell the property in order to access the higher percentages.

An alternative way of owning the property, and a method I am interested in, is to have your SMSF purchase the property through a Unit Fund. That is, you set up a Unit Fund and your SMSF purchases all the units in the Unit Fund (or you can buy some units and your SMSF buys the remainder of the units). Then with these funds the Unit Fund purchases the rental property.

When you get to the pension phase and the minimum percentage becomes more than the net rent you can pay yourself in units from the Unit Fund. This way you don't have to sell the property and slowly transfer the property from your SMSF to yourself unit by unit.

Also, if you have other assets in the super fund in addition to the rental property you can cash those assets out instead of the property as your minimum percentage grows.

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