Buying real estate through an SMSF is more complicated than other types of property purchases. It is recommended to engage the services of a professional mortgage broker like us to assist you throughout the process. At Simplify Finance, we have an experienced team who can help answer any questions you may have if you are considering purchasing property through an SMSF. Once your SMSF is established, we recommend applying for a loan and obtaining ‘pre-approval’ so that you’re ready to purchase when the time comes.
Benefits of buying property with your SMSF
- Your SMSF can purchase residential or commercial property worth more than its available funds through the benefits of gearing.
- Your SMSF will receive all income and capital growth (even if the property has not been paid off).
- Your SMSF can also use income from the property to help pay off the loan. There are tax benefits too.
Establishing your SMSF
- It’s important that you first establish your SMSF if you want to buy property through it; it can’t be done in retrospect and the value of the SMSF portfolio will determine your purchasing and borrowing power.
- When your SMSF is set up, the Trust Deed needs to give the Superannuation Fund Trustee power to: ‘Purchase real estate’, ‘Borrow finance’ and ‘Secure the repayment of borrowed money’.
- Because the single objective of your SMSF is to secure funds for your retirement, there are strict rules regarding property purchase and these are detailed in the Superannuation Industry Supervision Act 1993 (SIS Act).
Once you have set up your SMSF, you’re effectively in charge of it including reporting responsibilities. Ensure you understand this approach in full and get professional advice with our experienced team. Speak more about this with Simplify Finance.