Using Superannuation to Purchase an Investment Property

Yes, it can be done via a self managed super fund (SMSF).

Simplifying it, the SMSF contributes the funds for deposit and buying costs, the remainder is a loan against the investment property. Loan is repaid via rent from the property, super contributions, investment income.

Both the SMSF and the trust holding the investment need to be setup correctly.

You would need to seek professional advice.

Cheers

Tom

Make sure you deal with an Accountant you has experience with SMSF loans. You will be surprised that there are many that don't know what entities need to be created for an SMSF. The same applies for a mortgage broker or banker.

Make sure all the limitations, restrictions and costs are explained to you before you take the plunge as they do vary from traditional property purchases. Lastly be careful amount putting all your eggs in the one basket. 

Regards

Shahin

Hi Donavan

For under $70k I got a SMSF set up and funded the deposit and stamp duty on its first property.  For $110k you'd be able to set up, buy one place, and be close to having enough funds to buying the second.  Further they will well and truly have paid themselves off by the time you hit retirement age, at which time you can choose to use the rent as income, or sell one or both free from Capital Gains Tax (ie pure profit).

You need to ensure you have an accountant and mortgage broker on board both of whom do these kinds of setups all day long.  Piece of cake.  Don't be someone's guinea pig while they try to learn the ropes.

Feel free to drop me a PM if you like.

Sorry Kevin just can't agree on using someone like ESuper.

Hate to say in the SMSF world one product doesn't fit all and the little quirks often required with a SMSF Deed you are better  off using an expert like Jac M has mentioned.

Also i can tell you many of the SMSF lenders require Deeds to be re-written with organisations like ESuper and of course you bear the additional cost.

Sorry to repeat myself over and over again but YES you can buy land and construct a property or buy a house and renovate it. Just a matter of being fully across the SIS legislation.

I have done both as well as wrapped a couple of properties, bought and strata titled a block of 4, used my SMSF to provide 2nd mortgage loans etc. All totally legal if done properly.

Cheers

Yours in Finance

Hi Donavan,

Sure.

The accountant I used to set up the SMSF for me (and the bare trusts required by the lender at acquisition stage) is:

Douglas McCracken-Skeggs

He can be found at the office of Ron Skeggs and Associates, 275 Geelong Rd, West Footscray 3012, tel 9687 0933.

His email address is [email protected]

Douglas also does my SMSF's annual tax return and audit. 

For the SMSF mortgages, Richard Taylor, who has already posted on this thread.

Both of these boys drove the process to perfection.  They are gems.  Very tidy, no unexpected surprises.  In fact it all went so well that on settlement day of SMSF IP # 1 when the solicitor called to advise settlement had gone through I was like "Really???  Are you sure the State Revenue Office or the Land Titles Office didn't stop us dead in our tracks?  I thought this SMSF stuff was supposed to be a minefield!"  Both Doug and Richard are extremely across the SMSF rules and keep you in line.

For what it's worth, I did a lot of digging around and specifically decided not to go with one of these "hey we are great we bundle it up for you and it will all be very easy" mobs on the internet.  On the surface, it all sound wonderful.  But.  Things can get nasty expensive down the line when you just want to ask a little question, or your tax return is not a text book case.  There are folks out there pretending setting up and managing SMSFs is way harder than it actually is, and charging clients a fortune to shield them from it all.  Hmmm. 

Be very aware that if you get someone to set up your SMSF and they do not do it properly, it is very expensive to fix it, and you'll struggle to find a proper accountant who is prepared to clean up the mess for you.  You'll be in what is known as no man's land.  Whatever you do, go with an accountant and broker that others have used successfully.  Take recommendations ONLY from people who have set up their SMSF, bought and settled on at least one SMSF property, gone through at least one SMSF tax return and audit, and whose SMSF has been open at least a year.  Such people will by that stage have seen and understood all the phases, and have seen what kind of fees ASIC and ATO issue annually.  Any issues with accounting or mortgage broking would have been fleshed out by then you see.  It would be my recommendation that you only go with arrangements where the one person is your accountant – not a random assortment of fifteen people that pass your file around like a hot potato.  You need one person to be clear on your goals and circumstance and provide suitable advice accordingly, and you want every bit handled by that person (who should be a fully qualified accountant who is experienced in SMSFs that buy property).  You don't want work experience kids, assistants, or anyone that is not your accountant touching your SMSF at any time.  You do not want mistakes, you want a squeaky clean SMSF

Cheers!

Sure Kevin can you email me your email address.

Cheers

Yours in Finance

Richard,

I am glad i read this post, i currently have all of the esuper material at home ready to sign and send back.

i would like to purchase another property via a SMSF but have also been told that I cannot construct say a house and land package in the arrangement.

I have been on the Esuper website whereby you are directed to a St George calculator and given the correct LVR,s of 72 % . IR of around 6.45%. But you are only able to apply via SG which is ok, as Esuper track all of your  transactions, for audit purposes.

For zero outlay they seem ok and set up the SMSF quite well.

I guess my underlying question is how are you able to purchase say a block of land, build, rent it out or sell under the SMSF legislation, especially when the ATO forbids it. I would suggest that the structures of trusts really come into play? If so I would love the run down on the structure, and if it works out replicate the same strategy.

My other issue is that all of the lenders are quite quoy about their SMSF lending facilities, so I would be interested to see if the above rates are competiitve?

I would also be interested in hearing of others strategy in SMSF real estate to gain the maximum leverage out of the system, as I only have around 150k invested in super, so I would like a strategy whereby i can gain at least a couple of properties.

Regards