Creating and protecting your wealth
  
  05.06.2020
Financial focus  
 
SMSF Loans...
Invest in the property of your choice with super
 
  • Gear into property through the power of a Self Managed Super Fund Loan
  • Choose an asset class that suits your lifestyle and investment objectives
  • Plan your retirement on your terms

 

The tangible nature of property continues to makes it an alluring investment prospect none more so than in the Self Managed Superannuation Fund (SMSF) arena. Our 'headline strategies' include;

 

  • Leveraging against an investment property inside an SMSF allows further diversification of the funds assets
  • SMSFs sell off old and tired properties, leveraging against new and better 'maximised' properties
  • SMSFs sell out of jointly owned properties with the fund leveraging to buy better 'maximised' properties, SMSF Trustees capitalise on return of their personal  investment capital
  • SMSF loans provide better tax benefits on longer held properties particularly in the retirement phase

 

Investors who were torn between whether to borrow to buy property outside their superannuation or continue to drip feed money into the traditional super fund assets of shares and cash no longer have to be so undecided. Read more...

 

Changes to the super rules introduced in 2007 and recently updated in 2010 means that if certain requirements are met, SMSF can borrow to invest in residential property. The rules affecting commercial property are less onerous and provide even better advantages.

 

Residential property is easily understood by investors, has less risk, but inside super there are rules and regulations that must be complied with.

 

The choice between direct properties within super is often more a decision between two tax strategies - either borrowing to buy an investment property and claiming tax deductions or contributing to super and receiving tax benefits.

 

Investor preferences for either strategy usually come down to whether someone has a desire to borrow in the case of investment property, or to lock their money away by purchasing the investment property outright. In either case holding until it becomes available at or near retirement.

 

Superannuation accounts are continuing to look bleak with domestic and global market volatility applying downward pressure on portfolio and retirement saving values. So holding property within super and having the ability to leverage makes sense.

 

Significant tax benefits when investing into super cannot be ignored. Income on super is taxed at 15% - it is untaxed if you are in the pension phase and capital gains of 10% conditionally.

 

Our headline strategy comments;

 

  • Leveraging against an investment property allows the super fund to diversify it's investment options with a combination of assets making it possible to combine the benefits of property and share and cash based super.
  • Property held for many years within an SMSF's have most likely become old and tired, located in less desirable areas or developments, may be in need of renovation, or are now in less capita growth locations. Replacing these properties with much better 'maximised' properties using a SMSF loan will provide much better tax advantages and providing capital for other assets.
  • In many instances SMSF's Trustees assisted with the fund's purchase of investment property tying up personal cash resources and assets; never being able to realise against the capital outlay. As with the above strategy replacing the fund's old and tired investment property, using a SMSF loan to buy a much better 'maximised' property will unlock the Trustee's capital to be used for personal wealth creation opportunities or paying down a home loan. 
  • The underlying purpose of the super fund is to provide income to it's members in retirement. Holding 'maximised' property within the fund using a SMSF loan provides many tax advantages, none more so than in the pension phase. Income on assets and capital gain in the pension phase are untaxed; or outside of the pension phase income is taxed at 15% and capital gain at conditionally10%.

 

 

The opportunity to take advantage of SMSF borrowing opportunities has never been more advantageous. Why risk your long terms retirement savings on the financial market and super fund managers who continue to place your money into a deepening money pit. You have the opportunity to take control and decide on your investment assets.

 

If you are interested in any aspect of the SMSF Loan strategy, setting up your own SMSF, taking out a SMSF loan, updating your existing SMSF deed then call SME Financial Services on 1300 340 060 to discuss how we can assist you. Alternatively email your details to info@smefinancialservices.com.au  and we'll be in touch.

 

 

The information above is for general information purposes only and does not take into consideration your personal and financial circumstances.

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