Self-managed super funds (SMSFs), like other superannuation funds, are a means to accumulate savings for your retirement. What sets SMSFs apart from other fund types is that the members of an SMSF are typically the trustees, implying that they operate the fund for their personal advantage.

 

Individuals establish their own SMSFs for the purpose of maintaining control, flexibility, and the ability to make personal investment decisions. You have the power to determine your fund’s investment strategy and select the investments of your fund. Like all super funds, the tax rate for an SMSF is 15 percent.

Purchasing property through your SMSF is permissible only if you adhere to certain rules.

 

When purchasing a property through your SMSF, the following conditions must be met:

• The property must satisfy the ‘sole purpose test’. This means its primary function should be to provide retirement benefits to the fund’s members.

• The property cannot be bought from a party related to a member.

• Neither a member of the fund nor any parties related to the members are allowed to live in the property.

• The property cannot be leased to a member of the fund or any parties related to the members.

 

SMSF Loans for Residential Property

• SMSFs can borrow money to help buy a residential investment property. The property is held in trust for the SMSF until the loan is fully paid off. But remember, not as many lenders are willing to loan to SMSFs because it can get a bit complicated.

• With a limited recourse loan, the lender can only claim the property that’s been secured if things go south. This means all other assets in your SMSF are safe and sound.

• The rental income from the property can be used to pay off the loan. So, the property not only becomes an investment but also a means to repay the loan.

• And the best part? This loan structure is designed to fit like a glove with most SMSFs. So, integrating it with your existing SMSF should be a breeze!

 

SMSF Loans for Commercial Property

• SMSFs can borrow money to help buy a commercial investment property.

• The commercial property can NOT be used for your business purposes

• The commercial property can not be leased by yourself or a related 3rd Party(it has to be a genuine party who's NOT related or linked to yourself in any way)

• You can use the rent obtained from the commercial property to pay-off the SMSF loan

• The rent/lease obtained from the commercial property can be shown as serviceability for obtaining the loan with the Bank

• All expenses on the commercial property can used as expenses and deductions on the Self Managed Super Fund for TAX purposes

• Only a fixed Tax % rates apply for Self Managed Super Funds (not like Individual tax rates that are higher)