SMSF loans
Benefit from our knowledge of Self Managed Super Funds
Do you have an SMSF? Have you considered growing your retirement wealth through investing in property through your SMSF?
Since legislative changes in 2007, you have been able to use your Self-Managed Super Fund (SMSF) to borrow money for property purchases. Howard Ghedia and the What Loan team are familiar with the guidelines for borrowing money using your SMSF and are experienced in securing SMSF loans for purchasing property.
If you’re considering purchasing property with your SMSF, we can assist you with qualified financial and legal advice to ensure you comply with all the laws related to superannuation.
The SMSF loans you can access are known as ‘limited recourse loans’ which protect the other assets in your SMSF. The lenders’ rights are limited to the security property should you default on your loan. The borrowed funds of SMSF property loans can also be put towards property repair and maintenance but not property improvements.
Although the lenders’ rights are limited to the security property should there be a default, you may still be entitled to income tax and negative gearing benefits. Keep in mind that a corporate/company trustee is generally required although some lenders will accept individual trustees.
The general facilities for SMSF residential or commercial property loans include:
- Loan terms of up to 30 years, depending on the security property type and lender policy
- Variable or fixed interest rates, with many lenders providing interest-only periods
- Variable LVR (loan to value ratio) depending on the security type. For example the LVR for commercial property is from 60-70% (lender policy varies) and for residential property 80%.
We will work with you and the lenders to secure the appropriate loan and will handle negotiations, paperwork, settlement, and beyond.
Can you purchase residential property with an SMSF loan?
Your SMSF can purchase residential property, but there are strict rules to follow. SMSF members cannot live in or rent the residential property, nor can any related parties.
When you purchase a property with an SMSF loan, the property is held in a separate holding trust. So in the case of a default, the lender can only claim the property and no other assets in the SMSF. This loan structure is known as a Limited Recourse Borrowing Arrangement (LRBA).
While the loan is in place, any rental income goes to the SMSF, but the SMSF cannot claim the property’s capital gain until the loan is repaid and the property is transferred to the SMSF.
What are the advantages of an SMSF loan?
An SMSF loan can help you diversify your SMSF portfolio by enabling your SMSF to invest in property even if the fund doesn’t have the entire purchase amount upfront.
Plus, the interest on the loan and property-related expenses are tax-deductible within the SMSF. So this has the potential to reduce the taxable income of the SMSF.
Due to the Limited Recourse Borrowing Arrangement, other assets held by the SMSF are protected from any potential default risk.
Your SMSF can purchase residential or commercial properties, but there are strict rules in place. For residential properties, the SMSF members or any related parties cannot live in or rent the property.
We can assist with qualified financial and legal advice to ensure you comply with all the laws related to superannuation.
Why choose us?
Howard Ghedia is an experienced mortgage and finance broker with complementary knowledge and experience gained in over 25 years as an accountant, financial advisor, and tax specialist. With a wealth of experience and a strong professional network, Howard helps find the best financial products for his clients.
Why people choose Howard Ghedia Mortgage and Finance Broker trading as What Loan for SMSF loans
We are familiar with the guidelines that must be followed for borrowing money through an SMSF
We are certified public accountants with many years of experience as well as being accredited mortgage and finance brokers
We have access to a wide range of lenders with some innovative and flexible products.
We are available to talk through your circumstances and your options
We can handle the negotiations, paperwork, settlement and beyond
We are prompt and communicative
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We can work with you to secure an SMSF loan