Once established, a SMSF property could be a perfect, long-term match – but do your homework
IN MY opinion, purchasing property for Super has been made deliberately complex by the Government to ensure that our important superannuation funds are not frivolously wasted away and we do not use this alternative investment method as a vehicle for tax avoidance.
I will add that I do believe the reasons for its complexity make economic sense.
Acquiring residential property using your superannuation is not an easy process, nor is it the right choice for everyone. If you’re considering it, you need to seek professional independent advice from the start.
Over recent years I have discussed this topic with many professionals, industry experts and had personal experience of the process.
From what I can gather, unless you have at least $250,000 to $300,000 in your superannuation – that can be you and your partner’s balance combined – it is not an option worth pursuing.
It’s not cheap. Expect to spend $3000 upwards on establishing your Self-Managed Super Fund and then several thousand more in other fees. Further, there will be added costs as your fund has to be audited annually.
You cannot live in the property, rent it to your family, or holiday in it. And you cannot buy a property from a member of the fund or an associate of any member.
The only place to go is an independent professional, accredited and licensed accountant.
Yes you will pay for this advice, but they should get it right and have a an unbiased view. I also suggest going to the bank directly and shopping around for their terms.
Rates are typically higher and loan establishment fees are generally always charged. The size of the deposit is generally a minimum of 20 per cent and it will be insufficient to have only the deposit amount in your fund.
While this Super investment option is initially an expensive and complex one, once established, your SMSF and the property could be a perfect match for you over the long term. But do your research.