Forum Replies Created
- Qlds007 wrote:Really 75% lvr on a Com security under $250K you learn something new every day of the week.
Cheers
Yours in Finance
I think Adelaide Bank & Bank of Melbourne have a product up to 75% lvr with a $200k (neg.) minimum.
ianjackyinvest wrote:So in my case I would like to buy a 42sqm office for 190k and you are suggesting I may be able t secure 70% LVR and use the balance out of my SMSF, plus have my wife's company rent the office from the Trustee.Hello. From the research I have done in the last few weeks, you can borrow 65-75% of the purchase price/value. Your problem will be a small number of lenders to choose from given the low value of the loan. Many will only look at loans $500k+, others $250k+. At sub $200 there are only a small handful of lenders writing loans but most will do 65%, some 70% and at least one will do 75% (subject of course to other criteria).
Qlds007 wrote:TicIf you have put in an Offer i hope you have the SMSF Trust Deed all set up.
The Bare Trust will need to be noted on the Purchase Contract and finding a Solicitor open this time of year to prpeare the Trust is not going be to be easy especially if they want to accept your offer fairly quickly.
Lenders are still processing applications over Xmas but most are on skelton staff for the next couple of weeks.
We have a couple of settlements due on the 30th and not easy to get booked in.
Cheers
Yours in Finance
All in hand. Everything will be in place by the time it is needed. They cant do anything their end until the 16th. I have pre-approval on the loan. I have someone setting up the trusts and companies. Solicitors I have. Contracts won't be signed until at least the end of Jan. Anything prior is in my name or nominee. Of course nothing will go that smoothly but once the ball is rolling then at least I have some goal posts to kick it toward.
Thanks.
Scott No Mates wrote:I preferred your original explanation Terry. But getting back to business. 5% annual growth may be bullish but returns offset cg. generally you would factor in vacancy however being the tenant you're fine unless you outgrow/leave the property. Location: you'd need a crystal ball to pick the best locations but none of those are bad areas. you should still do your due diligence, swat analysis etc for each site……. Review competition/alternatives Etc…….Thanks Scott and Terry. I've found somewhere in South Melbourne and put in an offer. Likely it will be funded through SMSF (it stacks up well with positive cash flow) but if not then I'll fund it directly.
I'm sure I could have done more research, looked at more property but from what I have seen we are talking about marginal differences. Like you say… no crystal ball. I think I have the answers to most of my questions. Frankly, I can earn more working on my business than spending time looking at property. I'm encouraged by the fact the property is new, mostly sold and leased and the area is entering a stage of regeneration.
I'll report back in twenty years and let you know how things turned out.
Cheers!
Qlds007 wrote:Terry has wrapped it up quite elonquantly.Remember an Asset sold in the SMSF whilst in Pension phase is actually Tax free so if you purchased the Commercial property kept until retirement, commenced an annuity and then decided to sell the asset all home and hosed.
Cheers
Yours in Finance
OK, this is where I was a little confused. I neglected to mention that the plan would be to retain the asset in my SMSF until retirement.
Terryw wrote:Income the SMSF makes is not tax free. The rate is 15% for most income. eg. rent received by the SMSF is taxed.
The SMSF also pays CGT. if it sells a building it pays CGT at the rate of 15% or 10% if held more than 12 months.OK, thanks Terry. I'm sitting down with someone early in the new year to work this out, just looking to go armed with as much info as I can.
I'm thinking the key will be ensuring the cashflow in the SMSF is workable, this will obviously depend on the income from rent and super contributions compared to the cost of financing the property loan and other costs associated with running the SMSF. I'm trying to kill too many birds with the one stone;- I don't want to burden the business with a massive rent and our super contributions are way down on what they were since starting the business (and drawing a smaller salary). I'm hopeful the leverage over the long term will still far outweigh these short term issues.
Any other advice on the other questions?
Terryw wrote:You have missed something. you the tenant would be able to claim a deduction for the rent of the premises from your SMSF.The income from the SMSF is taxable as is capital gains, but the tax rate is much lower than being held outside. CGT for eg is just 10% if the asset held more than 12 months. Income tax is generally 15%, but the fund will be able to offset the income from rent with deductions for expenses such as depreciation and interest etc.
Once you meet a few conditions the income from the SMSF can be received tax free and also any asset supporting this income stream, pension, can be sold CGT free as well.
Not to mention the asset protection benefits of a SMSF – better than a discretionary trust.
I'm not sure I am with you. I know I can claim any rent my business pays as a tax deduction but this is true regardless of who owns the property. I'm trying to keep the SMSF and business issues seperate. The questions I have relate purely to the SMSF, financing the property through the SMSF and the property purchase.
Your second point on tax. You are referring to my personal from the SMSF in future years? The capital gain on the property is always tax free whilst it is held in the SMSF?
