All Topics / Finance / 401K used to finance IP

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of vtxdevovtxdevo
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    @vtxdevo
    Join Date: 2004
    Post Count: 10
    November 25, 2004 - 4:19 am

    Firstly, this is my first posted topic and I hope that it’s relevant to this forum.

    Anyway, I have a 401K account in the US that is available to cash in if I choose, since I no longer work for my former employer where the account was initiated and since I’m not a resident, then this gives me access.

    While reading Steve’s first book I came up with the idea of using some of the proceeds from my 401K to purchase an investment property that provides a +CF. Until I’ve got all the details of legal structures , property etc, I’ll leave the 401K where it is, plus the US$ is not very good at the moment.
    I was just wondering if this would be a good strategy and thus launch me into investment properties?
    Has anyone got some advice?

    Profile photo of luckyoneluckyone
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    @luckyone
    Join Date: 2003
    Post Count: 148
    November 25, 2004 - 6:07 am

    What on earth is a 401K?

    Thanks,
    Luckyone

    Profile photo of Stuart WemyssStuart Wemyss
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    @stuart-wemyss
    Join Date: 2003
    Post Count: 598
    November 25, 2004 - 6:34 am

    401K is the term used for compulsory super fund contributions (it’s your super monies).

    Using super to invest in property is reasonable so long as there aren’t any exit taxes. I guess you have to weigh up relative risks and returns.

    Cheers

    Stu

    Profile photo of vtxdevovtxdevo
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    @vtxdevo
    Join Date: 2004
    Post Count: 10
    November 25, 2004 - 6:58 pm

    I believe that I can roll the 401K into another companies 401K fund without incurring taxes. So with this in mind, I was wondering if I could roll the 401K into a self managed super fund that invests in +CF properties and not incur a tax debt at this stage?
    Who should I go and talk to about this? Would my CPA be the best person to see?
    I would also need the legalities of setting up my SMSF.
    definitely a mind boggling issue regarding risk/return.

    Profile photo of clintdbclintdb
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    @clintdb
    Join Date: 2004
    Post Count: 29
    November 26, 2004 - 6:44 am

    I’m not an expert, but I believe that Australian Self Managed Super Funds (SMSF’s) cannot “borrow” for the purposes of investing.

    Therefore, you can’t buy an IP with the traditional deposit + loan arrangement – you have to go and buy the IP outright.

    Hope you have enough money in your Super Fund for that one!

    PS, could someone confirm the above for me. That is my understanding of the rules (my father has his own SMSF).
    Are there any tricks around the “no borrowing” rule?

    Regards,
    Clint

    Profile photo of AdministratorAdministrator
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    @piadmin
    Join Date: 2013
    Post Count: 3,225
    November 27, 2004 - 4:45 am
    Originally posted by clintdb:

    I’m not an expert, but I believe that Australian Self Managed Super Funds (SMSF’s) cannot “borrow” for the purposes of investing…. could someone confirm the above for me. That is my understanding of the rules (my father has his own SMSF). Are there any tricks around the “no borrowing” rule? Regards, Clint

    Hi Clint

    If you want an authorative ruling on that one, you can do no better than PMing Julia Hartman:

    [email protected] .

    Julia is an eminently respected accountant on this forum (based in Brisbane and Sunshine Coast).

    Check out her http://www.bantacs.com.au website, click on the Free Books link for free pdf files of stacks of titles, download a few, and you’ll get a reasonably unbiased idea of what I’m talking about.

    Cheers
    Greg

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