Anything involving the word "Oxford", "Cambridge" or "Harvard".

Hi M.Investigator is there any particular reason you continue to post links to foreign websites when this forum is predominantly for Australian investing?  I am concerned that newcomer investors to the site might not realise that some of the advice/legislation is not relevant to Australia.

Hi Troy

I have set up my own SMSF within the last 12 mths and used it to buy property.  Here are my comments:

Setup cost of SMSF was $1600.

I chose to have a corporate trustee.  You have to anyway if your SMSF has only one member.  Either way, corporate trustee is better for asset protection.  This is because if you personally get sued for something, then the SMSF assets are safe because they are owned by a different entity.  (Law suits are raised against an entity such as a person or a company).  YOU are one entity.  The corporate trustee (eg ABC pty ltd)  holding the SMSF assets is a separate entity.  Make sense?

My SMSF bought a 3BR house and borrowed 80% from St George Bank.  St George Bank required the asset is held under a bare trust, which cost just shy of $1000 to set up.

My annual costs to run my SMSF are $660 for tax return and audit purposes.  I've got my death and TPD (total & permanent disability insurance) in my SMSF as well at a cost of $60 per month.  Whether you realise it or not you have death and TPD insurance in your superannuation, which you will forfeit when you roll all your cash out of regular super.  You don't want to be exposed so make sure you are insured somewhere.

The bank will charge $5 per month for account fees on your SMSF's transaction account.

There will be all the usual annual costs for any property the SMSF buys (council rates, water rates, insurance, mortgage interest, maintenance costs re plumber etc, property management costs). 

Whether you realise it or not you ARE being taxed on your super money at the moment.  It just doesn't get taxed until it lands in your super.  If you look at the statements you will see 15% comes out for tax.

Your SMSF will pay 15% tax on any profits.  That means:

You work out your SMSF's income.  This will be your contributions as deducted from your salary plus any bank interest it earns plus any rental income it earns plus any dividend income on shares etc etc.

Then you work out your costs.  So  smsf accounting fees, death and tpd insurance, bank fees, property holding costs eg council rates, water rates, insurance, mortgage interest, maintenance costs re plumber etc, property management costs.

You then do an income minus costs calculation and the end figure is what is subject to 15% tax (if it is a profit figure. obviously no tax will be owing if there was a loss…. but you do not want to be running a SMSF at a loss).

Go for a property that is in a high demand area that is not going to have zero demand if the one and only industry in town goes bust or moves out.  You also want to aim for a rental yield of no less than 6.2% in my opinion.

Richard Taylor sorted out the SMSF mortgage for me.

Apparently I have moved on from the "Investing Adherant" level.  Thank goodness for that!

Hey DWolfe I think I need to get myself one of those iPads so that each of my posts appear 4 times.  Quadruple the points hey !

I'm pretty sure you are not allowed to call a room a bedroom unless it has a window to the outside world.  Presumably a skylight might be accepted as an alternative.  A quick hunt on google finds this;

http://somersoft.com/forums/showthread.php?t=52530&page=2

refer to comment number 23 which says:

"the Building Code of Australia requires bedrooms to have at least ventilation equal to 10% of the floor area and light (glazing) equal to 20%. I think that skylights would give an unsatisfactory feel to the room.

You will need approval from ACTPLA to put in a window otherwise, when you sell, it will show up on the Building Report (which you will have to provide) as being unauthriosed work and give any potential buyer an "in" to chisel the price.

You are probably not selling at present but I thought I;d giveyou the "full version"…..

Also, people dont often realise but unauthorised building work is not insured and is not insurable unless approved….just a thought"

I'm no expert but it sounds to me like you need a new solicitor.  May I suggest you consider posting your thread in the Getting Technical forum…. it is more likely to get a response from those in the know.  TerryW is the man I'm thinking you want to fish for a reply from.

That is quite true, though I'm happy as a pig in mud spending lots of time in the very awesome Grampians.

I'm no solicitor, but I cannot see how the vendor's bank would allow settlement to go through.  They are owed nearly $1.5million, but the sale will only fetch $1mill.  Ask your solicitor, they will have encountered scenarios like this many times over and will explain what it means to you.