A Self-Managed Superannuation Fund (SMSF) residential property investment strategy is a prime example of what people are doing to flex their financial freedom this year.
SMSFs have been around for over 20 years and are a popular investment structure for one million Australians. SMSFs are now the biggest and fastest growing sector in the Australian superannuation industry.
Administering your own SMSF setup gives you direct and personal control of your superannuation investment structure, allowing you to implement a range of diverse and flexible investment strategies personalised to your needs and risk appetite.
A SMSF home loan is used by people wishing to invest their superannuation in the residential property market i.e. your SMSF borrows the money to invest in property.
For most people, superannuation is the longest investment they’ll make and so is very suited to residential property.
As Trustee of your SMSF it is important to ensure an Investment Strategy has been prepared, detailing the investment objectives and specifying the types of investments your SMSF can make.
Related Reading: 'How to spot a property hot-spot'
Key Features of a SMSF investment property loan
- Your SMSF can borrow money for the purchase of a residential investment property within the Superannuation Fund, with the property held in trust for the SMSF until the loan has been repaid.
- The SMSF investment property loan is a limited recourse loan which means the lender’s rights of recovery against the SMSF Trustee (you) if the loan goes into default is limited to the secured property and any additional security the Guarantors may have provided.
- Serviceability of the loan can be demonstrated through rental income from the investment property as well as superannuation contributions.
- Investment loans are to be supported by personal guarantee(s) from the beneficiaries of the SMSF.
- The Trust may be entitled to potential tax deductions by offsetting the loan’s interest and other borrowing / property expenses against the property’s rental income. The borrower / guarantors should seek financial and legal advice.
Who can obtain a SMSF investment property loan
- Australian residents that have an existing SMSF or are in the process of establishing a SMSF.
- SMSFs with an existing residential investment property loan wanting to refinance from an existing lender.
If a SMSF residential property investment strategy sounds like an opportunity you’d like to hear more about, the Australian Tax Office (ATO) and the Australian Securities and Investment Commission (ASIC) have some excellent resources at the following links:
ATO: SMSF Videos
ASIC: SMSFs and Property
Alternatively, it pays to have a conversation with a real person who wants to hear your story and run through some examples with you. Why not incorporate a discussion about SMSF property investment as part of our free no obligation home loan review?
It’s just one of the many features and benefits included in a tailored home loan from Loan Avenue – affordable home loan solutions for everyday Australians like you.
Related Reading: 'Borrowing to invest'
Let us show you. To make an appointment with one of our experienced and accredited finance professionals call 1300 56 26 28 today or leave a message here.
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