Self Managed Superannuation
Fund Loans
Recently the Government introduced legislation that for the first time allowed superannuation funds to borrow when purchasing direct property.
From a practical point of view this type of purchase is made through a Self Managed Superannuation Fund rather than a large industry or company run fund. This allows individuals to set up their own fund where they act as Trustees and make investment decisions on behalf of the members … who are usually themselves! In other words, you are able to take control of your own superannuation albeit with advice and guidance from a qualified financial adviser.
This is great news for investors who can now take advantage of the generous tax concessions enjoyed by complying superannuation funds. There are some added complexities and not all banks are geared up at this stage to accommodate SMSF loans.
Here are a few features that will help you decide whether to take things further:
1. Almost anyone can set up an SMSF. You DON’T have to be self employed, but there may be a minimum fund balance that will dictate whether borrowing for property is viable
2. You can borrow to buy both residential or commercial property in an SMSF
3. Interest rates, whilst slightly more expensive than traditional loans, are still very competitive
4. There are professional firms that specialise in assisting you to manage an SMSF so compliance is simpler than you may think
5. You should definitely seek advice from a financial planner before setting up an SMSF or buying property inside one
6. The entire process from property selection to settlement will take longer than a non SMSF purchase, so we strongly advise that appropriate structures (and ideally pre-approvals) be in place before selecting a property.
2. You can borrow to buy both residential or commercial property in an SMSF
3. Interest rates, whilst slightly more expensive than traditional loans, are still very competitive
4. There are professional firms that specialise in assisting you to manage an SMSF so compliance is simpler than you may think
5. You should definitely seek advice from a financial planner before setting up an SMSF or buying property inside one
6. The entire process from property selection to settlement will take longer than a non SMSF purchase, so we strongly advise that appropriate structures (and ideally pre-approvals) be in place before selecting a property.