Buy­ing prop­erty with your su­per

topic with many pro­fes­sion­als, in­dus­try ex­perts and had per­sonal ex­pe­ri­ence of the process. Here’s a few of my ob­ser­va­tions: Your cur­rent fund bal­ance: From what I can gather, un­less you have at least $250,000 to

Central Telegraph - - REAL ESTATE INDUSTRY NEWS - WORDS An­drew Win­ter

IN MY opin­ion pur­chas­ing prop­erty with your su­per­an­nu­a­tion 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 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 $300,000 in your su­per­an­nu­a­tion - that can be you and your part­ner’s bal­ance com­bined - it is not an op­tion worth pur­su­ing. Costs: 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. Keep away: 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. Ad­vice: 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 should have an un­bi­ased view. I also sug­gest go­ing to the bank di­rectly and shop­ping around for their terms. Not only can they help you with the loan, but also cre­ate an ac­count to hold the funds. Bare Trust: This form of trust is cre­ated as a SMSF is not al­lowed to bor­row money. This is a com­plex part of the sce­nario and you do need to dis­cover more. Lim­ited Re­course: This is a crit­i­cal term you will hear in your in­ves­ti­ga­tions. If your prop­erty pur­chase does not per­form as planned and for what­ever rea­son, per­haps rental in­come or hold­ing costs mean a short­fall ev­ery month; guess who has to make up that short fall? You! Also note the bank may want you to guar­an­tee the loan. One at a time: Ev­ery time you pur­chase a prop­erty, a sep­a­rate Bare Trust has to be es­tab­lished with all the as­so­ci­ated costs and li­a­bil­i­ties. Lender Cri­te­ria: Rates are typ­i­cally higher and loan es­tab­lish­ment fees are gen­er­ally al­ways charged. The size of the de­posit is gen­er­ally a min­i­mum of 20 per­cent and it will be in­suf­fi­cient to have only the de­posit amount in your fund. Add in gen­eral pur­chas­ing costs and SMSF fees along with the fact the bank will re­quire a cer­tain per­cent­age of your fund to re­main out­side the prop­erty pur­chase and rental in­come must be suf­fi­cient to cover that lenders pre-set re­quire­ments. 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 please re­search, get the right ad­vice and cre­ate your SMSF, be­fore you start your prop­erty search.

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