Why Successful Property Investors Make Super Contributions Every Year
Many Australians see property investment as a pathway to wealth. But why do some investors seem to build wealth more efficiently than others?
One of the key habits shared by successful property investors is this: they make regular contributions to superannuation, and they do so strategically.
You might be wondering what super has to do with property. The answer? Quite a lot, particularly if you’re working with a financial adviser who understands how to integrate your property and retirement planning. Here’s how savvy investors are using super contributions to reduce tax, enhance their returns, and build long-term financial security.
Property and Super: A Smarter Investment Combination
If your investment property is positively geared, meaning your rental income exceeds your expenses, you’re earning surplus income. While reinvesting that income into more property might seem like the obvious choice, many successful investors take a more tax-effective route by contributing part of it into super.
This approach helps to reduce taxable income and grow retirement savings in a lower-tax environment. The result? You keep more of your money and improve your long-term financial outlook.
Here are two strategies commonly used by investors in the know.
1. Personal Deductible Contributions
Beyond your employer’s Super Guarantee payments, you can make your own personal super contributions, and claim a tax deduction for them.
These deductible contributions count toward your concessional contributions cap (currently $27,500 per year as at 2025, including employer contributions), but they allow you to reduce your taxable income and pay less tax now, while growing your super for the future.
For example:
If you earn $100,000 a year and make a $10,000 deductible contribution to your super, your taxable income may be reduced to $90,000, potentially saving you thousands in income tax depending on your marginal rate.
Important: To claim the deduction, you must submit a Notice of Intent to Claim a Deduction form to your super fund and receive confirmation before lodging your tax return.
Additional Details:
These contributions are classified as concessional contributions and count towards the annual concessional contributions cap.
As of 1 July 2024, the concessional contributions cap is $30,000 per financial year.
For individuals aged 67 to 74, a work test or work test exemption must be met to claim a tax deduction for personal contributions.
2. Catch-Up Contributions
Here’s a strategy that many investors, and even some professionals, don’t know about: catch-up concessional contributions (also called carry-forward contributions).
If you haven’t used the full concessional cap in recent years, you may be able to contribute more than the annual limit this financial year. This is especially useful if you’ve:
Recently sold an investment property
Received a lump sum or inheritance
Started earning more income from your investments
You can carry forward unused cap amounts from up to five previous financial years, provided your total super balance was below $500,000 at 30 June of the previous year.
For example, if you only contributed $10,000 last year, you may be able to contribute up to $17,500 more this year, on top of the standard $27,500 cap, and claim the entire amount as a tax deduction.
Additional Details:
This strategy can be particularly beneficial for individuals who have had irregular income or taken career breaks, allowing them to 'catch up' on super contributions.
It's essential to track unused cap amounts and ensure contributions are made within the allowable time frame.
Why It Matters for Property Investors
Many property investors focus heavily on maximising rental income and capital growth, but overlook the opportunity to optimise their tax position.
Integrating super contributions into your investment strategy allows you to:
Reduce your current taxable income
Avoid higher marginal tax brackets
Build wealth in a concessional tax environment (15% tax in super, versus up to 47% outside it)
Prepare for a stronger retirement outcome
The key is understanding the rules, and applying them in a way that complements your overall strategy.
The Value of Good Advice
These strategies can be incredibly effective, but they must be implemented correctly. There are contribution caps, eligibility criteria, and timing considerations to navigate. This is where financial advice can make a real difference.
At Financial Wellness Hub, we regularly work with property investors to:
Maximise the benefits of positively geared properties
Reduce personal and investment-related tax
Incorporate super into their broader investment plan
Ready to Explore Your Options?
If you own a property or are planning to invest, it’s worth understanding how super contributions can enhance your financial position.
We offer complimentary 20-minute sessions to help investors like you explore these strategies and make confident, well-informed decisions.
Book your session today and find out how your property investment can do more for your future: https://financialwellnesshub.as.me/complimentary-session
Further Reading:
By Brett Tarlington