Thanks to the superannuation law changes back in 2007, all SMSF members can now borrow money in order to fund property investments, as long as they follow a strict set of rules. The arrangement that regulates the self managed super fund loans is commonly referred to as the limited recourse borrowing arrangement. This means that if your super fund has enough funds for a deposit, all the remaining funds of the total purchase prize can be borrowed.
The rules do not impose restriction the type of asset that can be purchased, however SMSFs have primarily borrowed money to purchase property investments. Investing in a property through the superannuation fund can be ideal for your taxes because if the property goes under your personal name, you’d pay more. This is one of the main reasons why people are opting for self managed super fund loans these days. But before getting all the contracts and paying out deposits you should get a pre-approval and once you have it you can establish the Property Trust Deed.
Since most people want to know where their super fund dollars are and what are they actually investing in, they need a proper guide for obtaining self managed super fund loans. First you’ll need to establish a trustee and a holding company in order to purchase property. However, in order to ensure that borrowing through your SMSF does not place other retirement investments held in your SMSF, the asset that is purchased must be held in a specific holding trust until the loan is repaid. But, if you’ve maintained your company properly including paying your taxes on time and showing а proper review at the end of each year, you won’t have a problem getting an SMSF loan.
There’s no point denying self managed super fund loans require a lot of documentation, a lot of patience and a lot of time and for that you’ll need to seek professional guidance. Actually, anything SMSF-related requires a lot of everything listed above. And since this is a serious job, relying on professional help is a smart move.
SMSF is a really popular fund among Australians and it’s more than obvious why. It gives them the liberty to invest and save for their future and the future of their whole family. Also, it’s one of the most DIY funds in our country and that’s pretty appealing, especially to people who understand finances and those who are interested in learning a few things about it. Members have complete control over their fund’s investments, however they need to develop and follow an appropriate investment objective and strategy.