Why not own property through a Self Managed Superannuation Fund?
Did you know that you can now invest in property using a self managed superannuation fund (SMSF)? What a great way to control your own future. Self managed superannuation funds are becoming a popular way for individuals to take control of their retirement savings.
How does this work?
The SMSF works the same as your industry based or retail superannuation fund. It accepts contributions from the members, you and your family, including your Superannuation Guarantee payments from your employer. The fund then invests these funds and manages the earnings and the contributions. The only reason members have for setting up an SMSF is to provide for their retirement and this is called “The Sole Purpose Test”
All the members of the SMSF are required to be Trustees of the fund and to be involved in making the decisions for the fund. The fund is required to have an investment strategy and the trustees are responsible for its implementation together with administration of the fund, with the help of the funds advisors, Accountant etc.
An SMSF can now Borrow to purchase property!
Following recent changes to the Superannuation Industry (Supervision) Act 1993 (“SIS Act”), the act that controls what your SMSF can do, your SMSF is now permitted to borrow to purchase an asset, i.e. property.
The loans needs to be on a limited recourse nature, and many lenders are now tailoring a suitable product for this style of lending. This means that the only asset available to the lender to sell in the case of default is the asset the loan was used to purchase.
What a great idea! Combining your property investments with your Superannuation.
This may seem like a great idea but you need to consult with your experts to determine if this option is viable for your own particular circumstances.
The information provided in this article is not intended to be a recommendation, offer, or invitation to take up securities or other financial products by any company or person. This article provides general information only and does not take into account your or any particular investor’s particular circumstances. You should always consult your accountants or financial adviser for advice that addresses your specific needs and situation before making investment decisions.