Using Self-Managed Super Fund to Buy Investment Property

Using Self-Managed Super Fund to Buy Investment Property

The use of SMSFs to purchase property is a common strategy in retirement planning and the benefits are considerable. However, SMSF property investment is not without its pitfalls and it requires careful research and due diligence. There are also additional fees and charges associated with SMSF property purchases, which need to be taken into account. It is also important to consider whether you can afford to invest in property inside your SMSF.

Using Self-Managed Super Fund to Buy Investment Property recent years it has become possible for SMSFs to borrow money to purchase property via a limited recourse borrowing arrangement (LRBA). The process of setting up an LRBA can be complex, so it is vital that you seek professional advice before you make any decisions.

Strategic Wealth Growth: Leveraging Your Self-Managed Super Fund for Investment Property Success

Before buying a property, your SMSF must have enough cash available to cover loan repayments. This can be from income generated by the property, contributions made to the SMSF or other assets in the SMSF.

A residential property purchased by an SMSF cannot be occupied by the trustees or anyone related to them – not even for short holidays. This is because of rules known as the ‘in-house asset’ investment rules.

Commercial properties purchased by an SMSF can be leased to almost anyone – providing the leasing arrangements are at arm’s length and the property is used for business purposes. However, the rules are stricter when it comes to residential investment properties. For this reason, SMSFs must seek professional advice before purchasing residential property as part of their retirement strategy.

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