Property purchased through an SMSF cannot be lived in by you, any other trustee or anyone related to the trustees - no matter how distant the relationship. It also cannot be rented by you, any other trustee or anyone related to the trustees.
You can only purchase a single asset with a limited recourse borrowing arrangement. For example, a residential or commercial property. You should assess whether the investment is consistent with the investment strategy and risk profile of the fund.
For SMSF's that borrowed to buy the property, they are restricted in what they can do. However if the SMSF purchased the property outright, then as the trustees of the SMSF you have full discretion to do whatever you want; renovate, sub-divide, develop, provided it is permitted under your SMSF deed.
You sure can live in the property after you retire as long as: while the property was owned by your SMSF, it passed the sole purpose test. the property has now been correctly transferred into your name, and; you've reached your preservation age and are now legally allowed to access your superannuation.
Any related parties, like a member of the SMSF or relatives of the member, can lend to the SMSF. The SMSF pays interest to the related parties. Therefore you can lend to your SMSF by drawing the equity in your home loan or other available funds. Any unrelated parties can lend to the SMSF.
An SMSF cannot buy land and build due to the rules around LRBA's. As previously mentioned, when an SMSF borrows money, they can only purchase a single acquirable asset, or one title. If you're buying land and building on it, this is considered multiple titles, which is prohibited.
Tax rules specifically prohibit the strategy of using any equity in the property investment to finance another property. To borrow to buy a property in an SMSF requires the establishment of what is described as a bare trust that holds the property apart from any other SMSF assets while the loan is in place.
It may be assumed from this that an SMSF cannot sell a property already holds to a related party. However, that is not the case – there is no legislative provision that prohibits an SMSF from selling a property or other asset to a related party.
Currently, an SMSF must be audited annually, and the trustees of an SMSF must appoint an approved auditor at least 45 days before their fund's annual return to the Australian Taxation Office (ATO) is due.
No, an SMSF cannot build on vacant land. Taking into account very specific exceptions, SMSFs are only allowed to borrow to acquire a Single Acquirable Asset. Building on vacant land is considered an improvement to the asset (the vacant land), which is strictly prohibited.
Superannuation advisors recommend a full valuation of any property asset in a SMSF every three years.
There's no legal minimum SMSF balance required to buy an investment property, but best practices recommend around $200,000. While the amount of money needed isn't set in stone, having a large enough deposit in place covers the initial fees and operating costs that accompany running the SMSF and property.
No, you can't. Again, this would contravene current Super Laws. That is you cannot rent residential property the SMSF owns to a fund member or any person associated to a fund member such as a relative.
Each lender that offers SMSF loans may have a different lending policy on how much you can borrow. Typically with a residential home loan you are able to borrow a minimum of $50-100k and up to 80% LVR.
If you own a property through an SMSF, the fund is required to pay 15% tax on rental income from the property.
A question often asked by trustees is whether they can sell an existing rental property that they already own to their super fund. The answer to this is a resounding NO, a SMSF cannot buy property from a related party.
Self Managed Super Funds (SMSF) are allowed to borrow to invest in direct property, managed funds or shares as long as a Limited Recourse Borrowing Arrangement is used for the transaction.
Self-managed super fund lending hasn’t been offered by Australia’s ‘Big 4’ banks since 2018. Now, there are only a select few second-tier lenders who continue to offer SMSF loans. Your choice of lender is even further narrowed down by whether you’re looking to borrow for commercial or residential purposes.
Due to being a specialised form of lending, mainstream banks dislike the perceived risk of self-managed super fund lending, such as:
At SMSF Mortgage Specialists, we can assist you throughout the entire process to ensure that your loan structure is the best set up for your needs and strategy.
Depending on your needs, there are lots of different factors that come into play. The interest rate is one example of this. There are pros and cons to choosing a variable rate or a fixed rate. We help you decide on the right loan amount, features, and structure. We take you through everything you need to know so your SMSF loan matches your investment strategy and cash flow needs perfectly.