Hi,
I am keen to gain access to my superannuation funds to allow me to fund deposits on multiple +ve CF property investments. I understand this is possible via setting up a self managed superannuation fund. However I have heard that these are costly to set-up and and restrictions of these funds mean it is not possible to borrow funds. Is this true or are there creative ways to achieve the desired result?
Any advice for a new forum member would be much appreciated.
Thanks,
Hi there
Whilst SMSF have an element of flexibility in their investment choices as designated by the Trustees the fund cannot borrow to purchase property.
Establishing a SMSF will only probably be viable if you have in excess of $75-$100K in Super although i have set up funds with less. This is mainly due to the annual reporting costs.
If you have sufficient funds in your Super there is nothing (subject to the investment plan of the Trustees) to stop you purchasing + Cash flow property but you would required to pay cash for the property.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Hi,
Thanks for the response, very helpful. Just as I thought although I have heard of some creative workarounds, such as the SMSF purchasing units in a separate unit trust (ie the deposit monies)and this entity then borrows the remaining funds necessary for the +ve CF investments. Would this work?
Regards,
Luke
Hi Luke
Regretfully you cannot get round this issue now.
A transitional arrangment existed for funds with less than 5 members that allowed the SMSF to invest in a Unit Trust or Company after 11 Aug 99 and before 1 July 09.
Such arrangements only apply if the Trustees made written election no later than 23 Dec 2000.
Any present arrangement needs to be unwound by the Jul 09 date.
All my dealings i transact in my SMSF whether they be a development / wrap or similar are all done with cash funds.
There is no legal way around this unfortunately.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Thanks for asking this question. Whilst I cannot shed any light on an answer for you I too appreciate the information given as I didn’t understand how to invest this way.
cheers
[biggrin]Laughing Max
Richard,
Thanks for the very helpful advice (again).
My conclusion is that there doesnt seem to be such a strong case to use super funds to purchase an investment property, if borrowing is not possible and I would guess both income and capital growth would have to remain in the SMSF and therefore not generating any positive CF.
Luke
Yes Luke both income and CG needs to remain inside the SMSF but then given the favourable Tax treatment (10% on CG after 1year 1 day) i like this type of vehicle for the odd wrap or subdivision.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Luke,
It may depend on your age at present.
If over 55 and working or not, you may be able to do something as I am looking at just this, but not to fund more properties.
If you are over 55 and need more info, email me at [email protected]
Cheers Len
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