A self-managed super fund (SMSF) allows you to take control of your retirement savings.
While there are many rules about the types of investments the SMSF can make, purchasing property is a popular choice.
But there are strict guidelines you must follow when making investment decisions on behalf of your fund.
While there are many rules about the types of investments the SMSF can make, purchasing property is a popular choice.
But there are strict guidelines you must follow when making investment decisions on behalf of your fund.
Here are our top 4 tips when considering investing in property for your SMSF portfolio
Investments must benefit members
It is a legal requirement that all investments must be made in the best interests of the fund’s members and conducted at “arm’s length”.
That means you cannot purchase property from other trustees or their family. Nor can you purchase a property for your own use through your SMSF.
It is wise to obtain expert advice before you purchase any assets on behalf of your SMSF.
Your SMSF can borrow money to purchase property
Borrowing money to purchase property can be a wise investment choice for many SMSF’s.
It allows you to generate income through rents as well as gain capital growth as the value of the property increases.
Borrowing money to purchase investment properties means your SMSF can take advantage of property opportunities as they arise, rather than waiting for the funds to become available through the regular contributions of the members.
Benefit from limited recourse borrowing
If the SMSF trustees use limited recourse borrowing to purchase an investment property for the fund, the fund’s other assets are protected.
This means they cannot be sold or used to repay the debt if the loan defaults.
Of course, before borrowing any money, the trustees should consider the fund’s ability to repay the loan.
Visit our mortgage calculator here.
Contact Us
If you are self-employed and would like further information, please call 1300 942 856 or request a call from one of our mortgage consultants here.
It is a legal requirement that all investments must be made in the best interests of the fund’s members and conducted at “arm’s length”.
That means you cannot purchase property from other trustees or their family. Nor can you purchase a property for your own use through your SMSF.
It is wise to obtain expert advice before you purchase any assets on behalf of your SMSF.
Your SMSF can borrow money to purchase property
Borrowing money to purchase property can be a wise investment choice for many SMSF’s.
It allows you to generate income through rents as well as gain capital growth as the value of the property increases.
Borrowing money to purchase investment properties means your SMSF can take advantage of property opportunities as they arise, rather than waiting for the funds to become available through the regular contributions of the members.
Benefit from limited recourse borrowing
If the SMSF trustees use limited recourse borrowing to purchase an investment property for the fund, the fund’s other assets are protected.
This means they cannot be sold or used to repay the debt if the loan defaults.
Of course, before borrowing any money, the trustees should consider the fund’s ability to repay the loan.
Visit our mortgage calculator here.
Contact Us
If you are self-employed and would like further information, please call 1300 942 856 or request a call from one of our mortgage consultants here.
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