Investment Property: Buy Property with a SMSF

Are you looking at your Industry Super Fund returns and wish it could have been better?

If you are looking for ways to leverage the consistently poor or negative gains on your current portfolio, then a SMSF property may be the right option for you.

How to invest in property with your SMSF

Though, property Investment in Australia has seen its ups and downs over the last couple of decades, as investors deal with the rise and fall of property prices, yields, and costs of living. But as investments go, it is still a sound strategy especially as interest rates are so low at the moment and renters are queuing up for somewhere to rent. Property investment is now is regarded as the largest investments an individual can even make with their money and is one of the best ways to secure a sufficient retirement income. And the best part is you can borrow using your SMSF to fund the purchase. Gone are the days, when you have to go through the costly and rigorous process that is usually associated with acquiring a property of your choice.

Now, in Australia, you can save for a raining day, by setting up a SMSF primarily for property purchase. We can help you fund SMSF Property Loans up to 80%* of a property value. The Fund will then contribute cash to pay the deposit and to meet the legal costs and stamp duty. Your SMSF will also cover the interests, maintenance, insurance, rates, body corporate fees, property management and other expenses incurred during the investment process. The program will take the responsibility of managing the property in the same way as any other real estate investment. The property is held in trust and the legal title is either transferred to the SMSF when the loan has been repaid or the property is sold.

Property Investment Strategies

With a self managed super fund you have a wider choice of investments than in the other superannuation options. The fees are generally the same too, and the flexible nature of self managed super funds allows you to benefit from the significant tax advantages that superannuation provides. When you invest in property with your self managed super fund, you are certainly investing your money where you can never loose. Properties are permanent fixed asset that never depreciate, but appreciate in value. These are fixed asset that can last you for many years.

SMSF Property Loans can invest in commercial or residential property. Purchases can be outright using cash or using a limited recourse borrowing arrangement.

All the running expenses of the property are paid by the fund, meaning you’re not out of pocket in the same way you would be with a directly-owned investment property, and your fund can take advantage of significant tax benefits.

In case, of commercial property, you can acquire a property and pay an arm -length rent amount from your business and claim a tax deduction towards funding your own retirement.

Using Super To Buy Property Tips

For eligibility, you must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members and must not acquire property from members and related party. When using your SMSF for property investment, you are not allowed buy property from a member or an associate of a member. The word “associate” is very wide and includes many related parties. The purchase of holiday home intended to be use as private apartment is prohibited, while there is also a penalty for flipping a home after purchase.

SMSF also have fees and charges, which you need to, know before signing the contract papers. These fees may and may not be in your best interest. Some of these includes, investment cost, upfront fees, legal fees, bank fees, stamp duties, advance fees and cost of accounting and auditing for your SMSF. These fees and charges can be higher than what you are currently paying and in such case, may cut into your retirement saving.

It is necessary that you find out all the fees attached to SMSF property investment and consult your financial expert for assessment before making a contractual agreement. Make certain that you have an SMSF investment strategy prior to starting. Be familiar with what you hope to get out of it, and how you decide to get it. Treat it as a prospect to give your portfolio a well-defined purpose instead, and you will rapidly identify that it has a considerably more defined form.

When looking for your property to purchase, you must know which investments can do you very good, whether it’s in a fantastic or bad condition. In other words, it should stand the test of time. Real estate investment entails skills and professionalism, it is important that you get yourself familiar with all the dos and don’ts and have in place all the necessary tools to enable you determine the right property, the best time to buy and right place to make your purchase.