I run a SMSF and would like to invest in property. I am aware that it is commonly perceived that you cannot leverage using the SMSFs capital. This is until I came across the following company/ website.
http://www.quantumwarrants.com.au/
There has already been a thread on this but not really any experience shared.
Could anyone let me know if they have interaction with this company and/or offer their opinion of what they are promoting?
Also any other ideas of leveraging off the Superfund capital into property?
I haven’t heard of them before, but it is probably using your SMSF to invest in a unit trust, which could then borrow the rest of the money to purchase an IP. It sounds like a marketing pitch to me as it is nothing new to do this.
However I have been informed that this will be outlawed be 09, so do your own due dilligenge and make an informed decision.
CATA
Asset Protection Specialist
[email protected]Thanks Cata
For clarification purposes…….
Are you saying their property warrants will be “outlawed” by 2009 or was it the SMSF invetsing into a unit trust?
From my sources (and others have different opinions) that investing through SMSF into unit trusts will be outlawed by 2009.
Others have different opinions.
I don’t know of property warrants and the structuring they are using. It sounds to me that they are renaming the units as warrants and pitching the same thing. Much the same as the Property Investors Trust. This trust was a renamed version of the structure consisting of a unit trust and hybrid trust combination (which between you and me, is what I posted long ago).
CATA
Asset Protection Specialist
[email protected]Hi salocker
While doing your due diligence, it may be worthwhile considering that 99.9% of unlisted property trusts in Australia are unit trusts. It will be interesting to see the government have a go at trying to close down that industry.
Also, if what you are doing now is legal, it’s unusual for governments to make their legislation retrospective, i.e it’s quite possible that you may not be able to do something after the legislation is passed but it’s quite possible that the structure you set up prior to the new legislation, will be able to remain in place.
If it were me, I’d be spending my money on some good advice from an accountant that specialises in this area.
Cheers, Paul
Paul & Karen Dobson
negative2positive
Turn your negatively geared property into positive cashflow.
Phone: (02) 4984 9540Talk to us about Wrap Training Joint Ventures.
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
You’re SMSF “can” however go in Partnership with a money partner can’t it; who can *borrow*..-would your SMSF know anyone who it can go in partnership with ;o)
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsSorry Redwing, but a S’fund cannot go into partnership as this would breach Sec 62 SISA, perhaps you’re referring to a Joint Venture. Seek professional advice from a super expert http://www.findlaw.com.au/
Super fund Compliance filters
1. Prohibition from lending & giving financial assistance to members & relatives Sec 65
2. Restriction on asset acquisition from related parties Sec 66
3. Prohibition on borrowing Sec 67
4. Investment must be at arm’s length Sec 109
5. In-house assets restrictions Sec 69
6. Sole purpose test Sec 62Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”Thanks for all your comments.
I have this in mind to invest in property, is it feasible?
1) Buy Property value of $500k using a HDT structure – 500 Units
2) Unit Holders as follows- SMSF 100 Units, Mum & Dad 400 Units
3) Bank Loan for Mum & Dad for $400kWith point 2, does it pass the arms length test?
With point 3, will the lenders loan mum & dad(highest income) $400k, with security over the property purchased for $500k?
Also due to the security over the property will this break the SMSF rules?I realise that I do need to meet a professional with this but would be grateful for initial feedback. Also any alternate ways to do this then pls advise.
Thanks
SalockerThanks Amanda..a JV then :0) and I concur with getting an expert to set it all up
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsHi,
I do know of another was to get into property using your super.
If you are seriously interested send me an email [email protected]
Regards
AndrewOriginally posted by salocker:Thanks for all your comments.
I have this in mind to invest in property, is it feasible?
1) Buy Property value of $500k using a HDT structure – 500 Units
2) Unit Holders as follows- SMSF 100 Units, Mum & Dad 400 Units
3) Bank Loan for Mum & Dad for $400kWith point 2, does it pass the arms length test?
With point 3, will the lenders loan mum & dad(highest income) $400k, with security over the property purchased for $500k?
Also due to the security over the property will this break the SMSF rules?I realise that I do need to meet a professional with this but would be grateful for initial feedback. Also any alternate ways to do this then pls advise.
Thanks
SalockerHi Salocker
I know next to nothing about super funds and their regulations, but would think if you owned the superfund and the trust, it would be too close a relationship.
Maybe if you can maybe partner up with some other family, your SMSF owns units of their Trust and their SMSF owns units of your Trust.
A lender would lend, normally, $400,000 to purchase units using a $500,000 property as security, but having a superfund may scare them off – if they read the deed. Maybe the units could be transfer to the superfund later on??
I am not sure security over the property would be breaking the super rules as the superfund would only own income producing units – not the property.
But I am guessing all the above. I don’t know the rules and haven’t looked into them – there are too many other things to look at first!
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi,
I do know of another was to get into property using your super.
If you are seriously interested send me an email [email protected]
Regards
AndrewAndrew, why not post it for all to read and comment unless of course as your first post this is an ad for some form of business.
SMSF can certainly purchase property and i have several properties within my SMSF as well as decent portfolio of shares and the odd instalment warrant.
Regretfully as has been stated a SMSF cannot purchase units in a UT or indeed purchase a property with a any related party where there is any form of borrowing secured against the Asset.
Trustee breaches within your SMSF are severe and can carry significant penalties both monetary and criminal.
Check with a Professional Adviser prior to taking such a course of action.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi All
I too ahve a SMSF and have heard via my accountant there are lenders who will arrange finance for SMSF / Trust JV’s whereby the SMSF owns one part of the building and the Other TRust borrows only against its portion of ownership. Tricky and I still need to clarify, waiting on comments from the org involved.
Regards
SueMIT | Owen Real Estate
Email MeSue
If any Accountant suggest a strategy then i would be giving them a wide birth.
Such a transaction will breach the in house Assets Test under Section 71A SISA. The transition rules for assets purchased prior to 11 Aug 1999 have until 1 July 2009 to unwound.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
If you have any issue regarding SMSF check with your auditor..in the end the auditor has to approve the transaction
In some cases it is a matter of accumulating sufficient capital in the SF so that it has sufficient funds to invest in it own right.
A “commercial ” arms length property trust with the same exposure to the relevant property market may be the answer. This can be a small syndicate of friends to a large property trust.
avanti lawyers
Avanti
That is actually not quiet correct.
The Trustees formulate the investment decisions not the Auditor and they are the who are responsible for the day to day management.
The Auditor is only requesired to sign off at year to confirm the compliance of the fund.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Guys,
Seeing i was asked why i did not mention the method i raised here you go:
I do work with a plan that allows your SMSF to buy a property using 20% of the purchase price.
The vendor is financed the remaining amount so there is no borrowing from the Super Fund.
So there are no other trusts involved.
There is no recourse to the fund or the individual.
You sign a simple property purchace agreement and then a standard property management agreement.It simple and easy and low risk.
Good luck with your SMSF
Yifto
Regretfully I believe the strategy breeches the SISA.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
I agree with Richard,
A SMSF cannot have an interest in property that itself has any form of gearing or security held against it. It doesn’t matter if there is no recourse to the SMSF.
Hi Salocker…
I just found this forum … and I am/ was wondering and interested in the same thing….
I actually went to a free seminar hosted by the PiC group in Brisbane.. and they really helped me in regards to managing my SMSF and buying property with it , they even have a service where they help you set it up if you would like. A couple of friends recomended it to me.. and they are doing really well.
There is another free seminar coming up in November .. the 19th I think…if you are interested. It really helped me.
http://www.picgroup.com.au or 1300 369 856good luck with your investing !!
You must be logged in to reply to this topic. If you don't have an account, you can register here.
