Feed on
Posts
Comments

PPG_Blog_Sept_article 1_property investment through SMSF

One of the advantages of self managed super funds (SMSFs) is that you can invest directly in residential property through your super. But there are plenty of rules governing how SMSFs can purchase and manage investment properties and the best place to start is with your trusted financial adviser or tax accountant.

You can only buy property through your SMSF if you comply with certain rules, which stipulate that the property:

· Must meet the “sole purpose test” of solely providing retirement benefits to fund members

· Must not be acquired from a related party of a member

· Must not be lived in by a fund member or any fund members’ related parties

· Must not be rented by a fund member or any fund members’ related parties

However, your SMSF could potentially purchase your business premises, allowing you to pay rent directly to your SMSF at the market rate.

SMSF property sales may have many fees and charges. These fees can add up and will reduce your super balance. You should find out all the costs before signing up including:

· Upfront fees

· Legal fees

· Advice fees

· Stamp duty

· Ongoing property management fees

· Bank fees

Anyone who gives advice on an SMSF must have an Australian Financial Services Licence (AFSL). ASIC Connect’s Professional Registers will tell you if the company or person holds an AFSL.

SMSF borrowing

Borrowing or gearing your super into property must be done under very strict borrowing conditions called a “limited recourse borrowing arrangement”.

A limited recourse borrowing arrangement can only be used to purchase a single asset, for example a residential or commercial property. Before committing to a geared property investment you should assess whether the investment is consistent with the investment strategy and risk profile of the fund.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks

Leave a Reply