Purchasing property with your super and a loan using an SMSF limited recourse borrowing arrangement is a very large commitment and can cost you your retirement nest egg if not done correctly.
This is where Superfund Partners comes in. Our role is to assist you and ensure that you get the best possible result.
Why choose us when you buy property with super?
- We have never and will never promote investment properties on behalf of a developer or property spruiker
- We have never and will never accept commissions from the sales of investment properties – from ANYONE!
- We do not recommend any specific lender or SMSF loan product
- We will never let anyone market to our client base – your details are always safe and private
- If we believe buying property with your super is not right for you – we will tell you – even if we lose your business!
Superfund Partners does not provide any recommendations on the purchase of SMSF investment including property.
Purchasing property using super is a transaction. You need to ensure you have a strategy in place before buying any investment – including property.
Is buying property with your super right for you?
Many Australians love property – and perceive it as a good investment. Although SMSFs have been able to purchase direct residential and commercial property for decades, it was only in 2007 when laws were amended to enable SMSFs to obtain a loan to assist in the purchase of property as part of their SMSF investment strategy. This changed opened direct property investment up for many SMSFs that would not have had the ability to purchase property without the help of borrowings.
We have been assisting people utilise limited recourse loans to purchase both residential or commercial property since our establishment in 2009, and many of our team have had even more experience with these transactions. Over this period we’ve developed a significant amount of knowledge and practical experience, and we can quickly identify whether you as an investor are suitable to use this strategy.
Buying property with your super may be suitable for your if:
- You are a business owner looking to purchase commercial premises for your business
- You are an experienced property investor looking to expand your portfolio
- You have a significant amount in superannuation – typically $200,000 between yourself and your spouse
- You understand the importance of cash flow in wealth creation
- You are in the accumulation phase – property is a long term investment
- You are looking to utilise strategies such as creating multiple tenancies or renovation for profit
- Your SMSF could purchase a property outright with no leverage but you are seeking diversification
- Your personal / business finances are in good order, and you have a clean credit
Buying property with your super is not suitable for you if:
- You have been advised to set up an SMSF by a real estate agent, mortgage broker, property promoter or anyone not licensed to provide that advice
- You have been to a seminar promoting SMSF property investment as the latest ‘get rich quick’ scheme
- You have spent a few hours searching for properties online
- You simply don’t have enough in super to make the purchase feasible (ideally 35%-40% of the purchase cost required)
- You are seeking to purchase a property which will be negatively geared and rely on your continued super contributions to keep it afloat
- You have existing negatively property investments in your personal name(s) and need to tap into your super to continuing purchasing more property
- You are at or close to retirement
- Your personal / business finances are not in good order or you personally have outstanding obligations with the ATO
- You are personally bankrupt or unable to act as trustee of an SMSF
There are multiple components to successfully completing a SMSF property purchase using borrowings including:
*Some banks require a Statement of Advice (SoA) document to be provided. For this document to be prepared, a comprehensive fact find as well as analysis of the proposed property purchase MUST be conducted. Some lenders may require a certificate of advice – however for us to sign off on the certificate, we still are required to prepare a detailed SoA. The requirements vary between lenders, and there are certain lenders where we cannot sign off on their requirements due to licensing restrictions.
We recommend you contact us and enable us to assist with the selection of a lender as it will be the main determining factor in whether the Advice Fee is applicable and how much it will be.
In addition to fees to establish an SMSF and Bare Trust, all SMSFs have ongoing annual fees. Our SMSF administration and audit fees can be found on our website here.
Typical ongoing fees applicable for an SMSF which has a single residential property would be:
- SMSF Administration – $1,620 ($135/month)
- SMSF Audit – $550
- ATO SMSF Levy – $259
- ASIC Fee (SMSF Company) – $46
- ASIC Fee (Bare Trust Company) – $246
- Total Annual Fees – $2,721
Please note that the above fees are current as at 22/07/2015 and subject to change. Please refer to the SMSF Administration Fees page on the Superfund Partners website, as well as the ASIC and ATO websites for the most up to date fee schedules.
| ATO – Limited Recourse Borrowing:
Questions & Answers
|ASIC MoneySmart – SMSFs and Property|
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