Hi all
Right so let's say I'm keen to open my own SMSF, and I want to spend all its cash on property. Can I do that? Or is there some rule that says I have to spend a certain percentage on shares or other type of asset class?
In addition to this, let's say my super balance isn't sufficient yet for the type of property I want to buy, but my current superfund is rubbish and I'm tired of them losing money. Can I just open my SMSF now and whack all the money into a term deposit for a year until I have enough ? ie it would hold no assets other than money in a term deposit until there was enough to fund a property deposit + stamp duty etc…
All advice welcome!
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi JacM,
Just buying my first property through my SMSF & its pretty straight forward. U Just need to set it up.(@ $1500-$2000. Can put u on to a great guy who does ours from the Gold Coast) I had about $100,000. We took $40,000 for shares( opitons) $20,000 Gold/silver( physical ) & $30,000 for a deposit on a unit. St George will lend 72% LVR to a SMSF. My super has never looked so good & at the end of the day I have the say where my money goes. Let me know if u want details for my ” super guy “.
Ash
Hi Ash,
Thankyou for your reply – yes I'd love your super guy's details – perhaps you could PM them to me?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Ash, I would be interested in your contacts details -my email address is [email protected]
Thank youNow let's look at the real costs,
$1500-$2000 is a little light,
You will require:
1. SMSF (set up may be $200, include set up of Investment strategy, ABN andTFN)
2. Corporate Trustee x2- $1100 (ASIC fee is $440 x2 ). I.e. The Bare trust will also require one as per bank instructions and flexibility and so as not to contravene super laws.
3. Bare Trust $800 – holding the asset on trust for the SMSF.
4. Bank application , vetting of the deeds and other administration costs – $2500
5. Solicitor that understands this process, if you process this incorrectly this may have further stamp duty and CGT complications. $1500
6. An accountant or in many cases (bank requirement) a Financila Planner must sign off on the deal- They will also navigate your way around this complete process- $3000
7. On a $250,000 property you will require 28% deposit as per STG, This is only for residential property, as you would expect commercial property the LVR is lower. This is $70,000 deposit.
8.If it is commercial property, the fund will need to be registered for GST. The fund must have this money up-front.
9. I would say $10,000 as a buffer in case of no rent or a negative factors prevail. i.e. you would not want to have no money in your fund to watch it sink in the first year.
10. Auditing and Acounting of the fund + ASIC fees p.a. = $2000In any event for a purchase of a property costing $250,000- You require a minimum of $91,100. Please note I have taken the cheapest of costs that I have found for these acquisitions. You will find the real world market is not so forgiving.
All the best, but it is not as cheap described above….once you get in the door prices will increase and be more evident.
awesome post number8 – thankyou!! One question – I rang the ATO and asked what deposit a SMSF must put in; and they said they had no stipulation… and it was therefore down to what the bank would loan. So if a bank (eg Westpac) would loan 80%, then the SMSF would pitch in 20% (not 28%) ??
My other question is can an SMSF sink all its cash into property? Or is it required to have some money in another asset class such as shares?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
That is correct, I have just completed an SMSF purchase for myself with a 100% loan. By completing internal lend, you can loan your SMSF what you please. The benefit of this is that you can also loan your SMSF at home-loan interest rates. This is a simple process of drawing up a loan agreement with your SMSF.
The investment strategy will require you spread your risk across many asset classes, you will find this is a little un-realistic when it comes to a large purchase such as real estate. I am personally full of property with any extra money in an ANZ transaction account attracting 4.5% interest (hence cash). This is a grey area.
Awesome – thankyou again
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
