Now properties can be acquired under SMSF (either residential, rural or commercial real estate) even if there are inadequate funds for the full purchase. Your SMSF can now make an equity contribution on the property and borrow the remainder of the funds to complete the purchase.
Looking for guidance before you get started?
You heard that property is a great investment for an SMSF and you are looking at establishing an SMSF to buy an investment property. Before
What Our clients are curious About?
- Your SMSF can buy a property through a SMSF Loan and the available funds within SMSF
- Mortgage lender does not have recourse to your SMSF’s other assets in the event of default
- Your SMSF receives all income and capital growth even if the property has not been paid off
- Your SMSF can use income generated from the property to help pay off the home loan
- Interest from the home loan may be claimed as tax deductions by the SMSF and can potentially reduce your SMSF’s tax liability
- Maximum LVR where company is trustee of the holding trust – 80%
- Serviceability of the new loan must come from proposed rental income, super contributions and/or existing earnings within the super fund.
- The SMSF should purchase property from an unrelated party. Purchases must be an arms-length transaction
- Investment in property must be consistent with your SMSF investment strategy
- In the event of a home loan default, the mortgage lender only has recourse to the property used as security and cannot claim any other assets in the SMSF
- The property is held in trust for the SMSF, which is entitled to its income
- Your SMSF makes the home loan repayments. After the home loan is repaid in full, the legal ownership of the investment property is transferred to the SMSF
- You can choose any kind of property including residential, commercial, rural, industrial or rural property
- The legal owner of the real estate will be the Property Trustee
- The beneficial owner of the real estate is the SMSF
- As mortgage lender has no recourse to the other assets in the SMSF, this provides the SMSF with protection for its other assets
- The home loan used to purchase the property through the SMSF are personally guaranteed by the member/s of the SMSF
- Rent is paid directly to the SMSF. Home loan repayments are made in the ordinary way from the SMSF
- The SMSF can pay out or reduce the home loan at any time – subject to the terms of the relevant home loan
- When the home loan is paid out in full, title to the property can be transferred to the SMSF