HAS SUPERANNUATION BECOME A GOOD VEHICLE FOR AN INVESTMENT PROPERTY?

RECENT changes to superannuation fund borrowing rules are making it easier than ever to acquire an investment property.

However, this strategy is only for self-managed superannuation funds.

It is not available for members of your average superannuation fund.

A self-managed superannuation fund (SMSF) allows Australians to take control of their superannuation benefits, giving them greater flexibility and choice as to how those benefits are invested.

With interest rates at near historic lows, and many considering the share market too volatile, investors are looking to property to help secure their financial future.

SMSF specialist advisor Scott Maroske said that previously buying an investment property in your superannuation fund required having the cash available for the purchase price, plus stamp duty and legal fees. He said few superannuation funds had the benefits available. Mr Maroske, managing partner of SuperXperience (a division of McConachie Stedman), said by using a Limited Recourse Borrowing Arrangement (LRBA) within your SMSF, it was now possible to borrow to purchase that elusive investment property.

“For those comfortable with gearing for property investments, the new superannuation borrowing rules are worth investigating,” he said.

“The Limited Recourse refers to the requirement that, in the event of any default, the lender can only have recourse to the investment property which is acquired and is security for the borrowing – the other investments of the fund are protected from the lender.”

If structured correctly, borrowing to acquire an investment property in your SMSF can give you access to greater returns than may have been otherwise possible.

“But gearing for investment purposes is not for everyone and neither are the added complexities of being a trustee of a SMSF,” Mr Maroske said.

“If you are considering buying property in your SMSF using the new borrowing arrangements, I would suggest you speak to a financial advisor or an SMSF specialist before you even think about signing a contract.”

McConachie Stedman is the largest locally-owned accounting and financial services firm in Toowoomba and has served the region for 65 years.

The specialist division, SuperXperience, has extensive expertise with self-managed superannuation funds, including fund establishment, investment and administration.

They invite you to attend their information seminar “Borrowing using your Superannuation” held on August 27 at 5.45pm.