Self-managed superannuation fund loans
In June 2021 there were nearly 6,000 self-managed super funds (SMSFs) in Australia. This number keeps growing every year as more and more people learn about the benefits of managing their own super.
The appeal of SMSFs is easy to understand. You have complete control over your investments, it can have significant tax advantages, and you can pool your super with members of your family. But one of the biggest drawcards is that you can use your SMSF to invest in property using an SMSF loan. This means that both the rental income and capital growth of the property will form part of your retirement savings.
However, investing in property through your SMSF is more complicated than a normal investment home loan, and there are a lot more rules to navigate. Pointer Finance can help you find the right SMSF loan to tick all the boxes and accommodate your needs – now, and into the future.
Things to consider
Before you decide to invest in property through your SMSF, it’s important to take the time to understand the rules about what you can and can’t do. Here are some of the main ones:
You can invest in either residential or commercial property, but the property purchase has to be in the best interests of all the members in your SMSF.
Like any type of investment, you should make sure that adding a property to your SMSF investment portfolio won’t adversely affect your liquidity, diversification or risk profile.
The property has to be an investment – neither you nor any of the other SMSF members can live in the property or rent it out to your family members.
You need to prove to the ATO that the purchase price and rental income reflect the true market value.
If you use an SMSF loan to buy the property, you can’t make alterations that change the character of the property until you pay off the loan.
If your SMSF loan isn’t set up correctly, you may incur substantial fines or be forced to sell the property. This can result in substantial losses for your SMSF.
With so many things to consider and keep track of, it pays to work with the right experts to make sure you have the correct structure, contract, and loan documents in place for your SMSF loan.
Speedy turnaround times
The property market waits for no-one. That’s why we offer speedy turnaround times, so you won’t miss out on the perfect opportunity.
Huge range of flexible loan options
Our broad range of flexible loan opportunities comes from access to over 50 lenders. It means we can find the right solution for whatever type of loan you need.
Support when you need it most
When it comes to property, we’ve seen and done it all. That’s what makes us so well-equipped to guide you through the process and do whatever it takes to make your experience a positive one.
Empowering you to make confident decisions
Whether you’re buying, building, or refinancing, we’ll guide you through the process and find you the best-fit loan so you can move forward with confidence.
Like any other type of loan, you have to prove to lenders that you have enough money to be able to comfortably meet your mortgage repayments. But unlike a normal home or investment loan, the loan repayments are made directly from your super fund. So you need to provide evidence of your SMSF’s earnings rather than your own. This is usually done by assessing the SMSF’s tax returns for the previous two years.
This is one of the things you need to be careful of with SMSF loans. If the amount you’re receiving in rental income doesn’t cover your mortgage repayments, you’ll have to make additional super contributions to cover the gap. That’s why it’s so important to buy the right type of property with strong rental prospects.
Yes. Your SMSF will have to pay stamp duty when the initial property purchase takes place. The property is then held under the ownership of a custodian until the loan is completely repaid. There’s an additional complication with SMSF loans that can sometimes mean you have to pay a second lot of stamp duty once the loan is paid off in full, and the property title is transferred from the custodian to the SMSF. We can talk you through this and help you work out how to minimise your tax implications.
Because SMSF loans can be quite complex, not all lenders offer these types of loans. We believe that when structured correctly, SMSF loans can be a great part of your investment strategy. That’s why we partner with several lenders who specialise in offering SMSF loans that meet all the necessary super and tax requirements.
We understand that life happens, and circumstances change throughout the life of your loan. We’ll keep you informed of market changes and get in touch regularly to make sure your loan is working for you. And if things change, we can help you find another solution.