Hi guys…. Im hoping anyone can help me. Is it possible to use my super fund as collateral or deposit to get a loan from a bank? If it is, how do I do it? What about the tax? Thank you.
jae
Under normal circumstances you are unable to withdraw from your Superanuation funds prior to age 55 unless in the event of severe hardship.
Therefore in most cases Tax is not an issue because you are unable to make the withdrawal.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
100% Finance on selected properties in the USA.
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Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
If on the other hand it is a self managed super fund your fund can actually buy property outright as no super fund can get a loan and take on debt.
There are several ways to proceed with this and if you use your super funds(if enough) for the whole purchase, it is an asset of the superfund so any returns have to stay in the super fund and accumulate. This would allow you to use it for super life cover and to invest in other asset classes such as managed share or property funds and international fixed interest returns as a couple of examples.
Another way is if you set up a trust and use say $150k out of superannuation to invest in a $300k property, the other shares in the trust cannot be owned by an interested party in the trust such as yourself. Therefore you could use all of that super money as a 50% purchase and a friends company or superfund could buy the other 50%. If it was in their individual names they could go through normal finance and approval means to supply their 50% for the purchase. Each of you would have equal shares in the trust and the property would be owned by the trust. However dont forget all of the income recieved by your 1/2 would have to be kicked back into your super and not accessed until normal retirement and then you have several options again.
So Im sorry Qld007, your answer was not fully accurate. Thanks for letting me suggest other options.
Basically you need a good financial planner that knows their stuff and is not limited in giving advise by whichever insurance company or bank pulls their strings. A great accountant who also has their own property portfolio will also be neccessary. So for those out there who use ther mums and dads accountant who has a nice cardigan or waistcoat and is polite to you isnt necessarily the right man for you and your business of property investing for your future.
Super funds are taxed at 15% going in, 15% ongoing and 15% on removal. This means that in most cases your reduced up front tax means your $$ are working better for you to accumulate wealth for your retirement and your final slice of tax is only paid after you have maximised your wealth in your superfund. It makes good sense to people on higher incomes especially to look at every option for tax minimisation.
Another tip is to use the spouse contribution scheme to reduce the main breadwinners taxable income. Each year you can contribute $3k to your spouses superannuation and it reduces your personal income tax by that amount. So you effectively bolster your future comfort by dropping the money into super. The tax department are happy as the government then have to fork out less when you do retire in payments to you, as you would be better self funded.
All a bit of fun, but basically go and see someone appropriate that has the full story.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!DD
My answer to Jae question was correct.
He asked ” Im hoping anyone can help me. Is it possible to use my super fund as collateral or deposit to get a loan from a bank” I answered – NO.
The alternative arrangment by investing in a Unit Trust and purchasing a geared property has transitional dates and cannot exceed 1 July 2009.
Again unfortunately this Statement is not entirely correct – “15% ongoing”. This is only where the Super Fund is a complying fund and it is 45% for non complying funds.
Where the Assets was held for a minimum of 366 days and is subsequently sold and a capital gain made then the Tax is reduced to 10%.
Again with correction – “Each year you can contribute $3k to your spouses superannuation and it reduces your personal income tax by that amount.”
A Tax offset is receiving by the contributing spouse which is 18% of the lesser of:
$3000 reduced by $1 for every $1 that the spouse’s assessable income plus reportable fringe benefits exceeds $10,800 or
The total of the eligible spouse contributions made in relation to the spouse by the contributing spouse in that year.Maximum Tax offset for 2005 / 2006 = $540 or 18% of $3000
Again moral of the story is consult an Advanced Financial Planner and not someone who has passed PS 146 which they hand out with cornflakes packets.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
100% Finance on selected properties in the USA.
Email us to be added to our mailing list.
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
So glad you again rise to the occasion Richard. Thats why I said go to somone who knows their stuff and only gave generalisations.
If it wasnt a complying superfund it couldnt even be a self managed fund so wow what a clarity of thought. Take a deep breath mate it would do you some good.
How many investment properties do you currently own? As a fellow investor it would be nice to chat sometime and see we are actually on the same page and trying to help someone, whatever our personal beliefs are. Nice to see you have done you advanced certificate, that must have been the fruit loops one not cornflakes like mine.
Lets stop this it is silly. But an honest thank you for clarifying those points.
Jae, sorry.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!QLDs007, I agree with you, the answer to the question is a flat out NO, and I think I would caution the extent on some of the advice that is given here, especially if the Dip FP is not followed up by an authorised rep status and a CFP. Superannuation especially SMSF is a complicated area and appropriate professional advice should always be sought from a certified financial planner or CPA.
I think its great that you guys know your stuff, but communicating this kind of technical info always has the chance of causing someone to take action on it without proper regard to qualified advice.
Cheers
There is a way Gentlemen but the inquirer has to be over 55 !!
Albeit not using the funds for deposit but just using the funds and salary sacrificing—if jae is not over fifty then I will not go into details —suffice to say it is totally legal.
Am looking at the very idea myself and have the info I needed, now just to decide if I want to take advantage of the deal !!Cheers and I envy your knowledge Richard and please do not forget the KISS formula. Cheers Len
Go to http://www.clearyhoare.com.au and get their contact details. Ask them about JVs with a self managed super fund (SMSF).
What you are trying to do only works with SMSF and there are strict rules.
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