Self-Managed Superannuation Fund (SMSF) Loans
SMSF Loans to Purchase or Refinance Residential or Commercial Property in Your Self-Managed Superannuation Fund
As part of the changes made to the Superannuation Industry Supervision Act (SIS Act) in 2007, it is now possible to get a loan to purchase a residential or commercial property through your Self-Managed Superannuation Fund provided you meet the legal and tax requirements for SMSF loans.
This provides Australians with a new way to save for their retirement allowing them to privately manage their superannuation funds and pay a maximum of 15% tax on their Self-Managed Superannuation Fund.
It is important to realise that setting up a Self-Managed Superannuation Fund is a complex process requiring due diligence and proper financial advice so obtaining a loan for your Self-Managed Super Fund will not be as easy as getting a loan to purchase your home.
Lenders in this specialised industry are constantly changing their policies and eligibility requirements and it is important you are able to have access to and understand the different products offered by all the lenders.
Frequently Asked Questions
Should I set up a self-managed superannuation fund?
Before you decide to set up a self-managed superannuation fund it is important you seek independent financial advice from an Accredited Financial Planner as well as discuss the tax implications and obligations of a SMSF with a qualified Accountant and Tax Advisor.
Once you have sought the right advice and set up your Self- Managed Superannuation Fund, your broker at World Class Finance can assist you with suitable SMSF Loan options in line with your requirements and circumstances.
You can read more about Self Managed Superannuation Funds on the following sites:
- ASIC MoneySmart: https://www.moneysmart.gov.au/superannuation-and-retirement/self-managed-super-fund-sms
- Superguide: https://www.superguide.com.au
- Australian Tax Office: https://www.ato.gov.au/Super/Self-managed-super-funds/
What are some of the benefits of a self-managed superannuation fund (SMSF)?
There are many benefits to having a Self-Managed Superannuation Fund. Some of the main benefits are as follows:
- The Tax Rate on income within a Self-managed superfund is charged at a maximum of 15%.
- There is no tax on income within a self-managed super Fund during the retirement phase.
- Maximum Capital Gains Tax Rate of 10% on properties sold after being held in SMSF for longer than one year.
- There is no capital gains tax on properties held in SMSF if sold after retirement.
- You can pay out the SMSF loan at any time subject to the terms and conditions of the loan facility.
- Your Self-managed Superannuation fund may claim expenses, including interest as tax deductions.
- Using gearing strategies, the SMSF can secure properties with a higher value than the total net worth of the Super Fund.
- A Self-managed super fund provides you with greater control over investments made by the superfund.
What are the basic attributes for a SMSF loan?
As Self-Managed Superannuation Funds (SMSF) are regulated by the ATO they can only borrow money under specific circumstances:
- The property you purchase must be income producing (positively geared)
- You cannot purchase vacant land unless it is rural land which earns income
- The SMSF must have enough money to pay the deposit and relevant fees for the purchase of the property
- You must use all funds provided by the SMSF loan on the purchase of the property, they cannot be used for anything else such as legal and purchasing costs.
- None of the members of the SMSF can live in the property, however they may purchase a property that they plan to live in when they retire as long as the property is transferred out of the SMSF after retirement.
- All loan repayments must be made by the SMSF, you cannot pay them yourself.
- You cannot offset losses from the property against your personal income, they can only be offset against the SMSF income.
Can I purchase a commercial property in my SMSF and use it as my business premises?
Yes, you are allowed to purchase a retail, commercial or industrial property in your SMSF and use it as a business premises as long as your business pays rent at market rate to the SMSF.
If you need a loan to purchase commercial property in your SMSF, contact our commercial finance specialists at World Class finance to discuss options.