How to use your super to buy an investment property
SMSFs are quite popular in Australia, with around 1.1 million people using them. If you're considering using an SMSF to purchase property, there are a few things you need to take into account first. Here's a quick guide to SMSFs and property investment.
If you're considering a self-managed super fund (SMSF), one of the key decisions is where to invest your money. One option is property, which you can be done in a number of ways.
What is an SMSF?
An SMSF is a private superannuation fund that you manage yourself, rather than one that’s managed by a superannuation provider.
It can have up to four members, all of whom must be trustees. This means that each member of the fund is equally responsible for decisions made about the fund and the fund’s compliance with relevant laws.
Superannuation is a type of savings account that your employer is legally required to make deposits into. You cannot access this money until you reach a certain age, which is known as the preservation age. The preservation age ranges from 55 to 60, depending on when you were born.
An SMSF (self-managed super fund) allows you to have more control over your superannuation. For example, you can choose how much money to contribute and where/how to invest it.
Can you use an SMSF to buy residential property?
SMSFs can purchase residential property, but there are a number of restrictions in place.
If you're considering purchasing a residential property through your SMSF, there are a few things you need to keep in mind. Firstly, none of the trustees or anyone related to them can live in the property. Additionally, the property can't be rented out to trustees or any related parties. And finally, the SMSF can't purchase a property that's already owned by trustees or anyone related to them. All purchases made through an SMSF must meet the 'sole purpose test' of providing retirement benefits to fund members.
The purpose of the sole purpose test is to make sure that the SMSF is only used for providing benefits to members upon retirement or their dependants in the case of the member’s death before retirement. This is essentially the golden rule of SMSF property investment.
Work with experts to decide what’s right for you
When it comes to SMSF lending, things can get pretty complex. That's why it's essential to use professionals who understand the ins and outs of SMSF property purchases. Oracle Group is here to help you find the right property for your SMSF investment.
When it comes to making financial decisions, it's always better to consult with an expert. That way, you can avoid the guess-work and get accurate information about your personal investment options.
If you have any questions, we are here to work alongside you, as your partner. We are with you at every turn to ensure that as you grow, we grow with you.
We work with you to build your wealth, and most importantly our partnership with you for the long term. We are here to see you into the future and build a strong foundation of trust and mutual achievement.
Please note this information is not financial advice and should not substitute advice from an authorised & licensed professional.