Self Managed Super

Self Managed Super

Self Managed Superannuation Property

Self Managed Superannuation Property – How does this work?

Superannuation funds are able to borrow money to purchase real estate although this can be very complicated to do via   an SMSF and so reliable financial advice is very important.  Individuals, who are part of a SMSF, can obtain specific loans via the SMSF arrangements to contribute towards the purchase of either residential or commercial investment properties.  Should a SMSF aspires to purchase property without having enough available funds for the full purchase price, the SMSF may make an equity contribution towards the property and secure a loan for  the remainder of the funds necessary to complete the acquisition.

What steps are needed?

  • Firstly investors need to set up a Self Managed Super Fund.
  • Attain financial advice from a reputable advisor.
  • Find suitable Self Managed Superannuation Property.
  • The SMSF assigns a Security Custodian to acquire on the SMSF’s behalf, the Self Managed Superannuation Property as collateral for the loan.
  • The SMSF contributes funds for the deposit.
  • The SMSF reimburses any stamp duty and legal fees.
  • The SMSF maintains the property the same as other real estate investments.
  • Any property is then kept in trust.
  • When the loan is  repaid the legal title is conveyed over to the SMSF
  • OR once the property is sold off,  the legal title is conveyed over to the SMSF

Further reading

The government website Money Smart is a very valuable source of information; http://www.moneysmart.gov.au/tools-and-resources

More details on the establishment of self managed superannuation funds can be read at: http://www.ato.gov.au/superfunds/content.aspx?doc=/content/00182478.htm

 

 

 

 

 

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