Self-Managed Super Funds

Self-Managed Super Funds

Self-Managed Superannuation Funds (SMSFs) offer trustees massive opportunities to invest into almost anything they want, including investment properties, Term Deposits and direct shares.

We are leaders in establishing and managing SMSFs. No matter what your desire is to establish an SMSF, or if you'd like to know whether one is right for you, we have simple answers and solutions for you.

If you've already got an existing SMSF, we can help you run the fund seamlessly and smoothly, while empowering you to take advantage of the flexibility and control this powerful type of structure can provide you with.

We can also offer you with guidance as trustees to help you understand and apply the vast legislation you need to be aware of to ensure you satisfy all of your regulatory requirements.

BORROW TO BUY PROPERTY THROUGH YOUR SUPER

House

With recent changes to superannuation, it's now possible to potentially use your superannuation savings to buy one or more investment properties through an SMSF. The process is a little tricky, but nothing our expert wealth advisors can't help you with.

First, you'll need to set up an SMSF, if this is a suitable strategy for you after thinking about the details, and possible restrictions and implications. Next, you'll need to obtain pre-approval on an investment property loan, and arrange appropriate insurances, such as Income Protection and Life cover. Following this, you'll also need to rollover your superannuation benefits into your new SMSF. This initial process can take a while, so you need to have a realistic timeline in mind.

Once you've found your investment property, we can help you set up the appropriate legal structure to allow you to buy the property through your SMSF, which will involve setting up a Holding Trust and normally a Corporate Trustee.

There are quite a few rules you must be aware of, and this strategy is not something you want to try and tackle on your own. Speak to us today and let us guide you through the process and help you get the most out of your superannuation.

Our aligned SMSF specialist mortgage broking services will help you find the best SMSF loan for you.

BORROWING THROUGH SUPER: A QUICK CASE STUDY

Rig and Taylor between them have combined accumulated superannuation savings of $120,000 and $80,000 respectively through generic public offer superannuation funds, with XYZ and ABC super. They also have choice from their employer regarding where they want to have their superannuation contributions including Super Guarantee and Salary Sacrifice to be paid.

After meeting with us, they've decided to take the plunge and establish a new SMSF. The costs to set it up are taken out of their new SMSF after it's all been set up for them, so they're not out of pocket themselves. They'd like to buy a residential investment property worth $400,000 from an unrelated party, and then rent it out at $400 per week. They will need to retain $20,000 in a new Cash Management Account owned by their new SMSF to cover fund expenses and pay for insurance, so they will need to borrow $220,000 from a recommended bank. Borrowing this amount shouldn't be a problem for them because most banks will lend up to 70% - 80% on the value of the property, providing serviceability looks good. They'll use the rent and their ongoing employer superannuation contributions to service and repay the loan over a 25 year term.

After setting up their SMSF, and before they rollover their superannuation benefits into their SMSF to buy the property, they want to make sure if they get sick or injured, or die, their financial position is protected. They apply to set up their recommended amount of insurance, and have the premiums paid by the SMSF. They understand that once they rollover their existing superannuation, any existing cover will be cancelled. They then start scouting around and find a property they want; and, then establish a bare trust that will hold the legal ownership of the property until the loan is repaid in full.

From a tax perspective, the insurance for Rig and Taylor is tax deductible to the SMSF, along with the costs to run the fund, and the interest on the investment loan and other property expenses including maintenance and depreciation. These tax deductions help to offset the assessable income on the rent and contribution’s tax on their employer contributions that are taxed at 15%.

They hold the investment property until they commence account based pensions with their superannuation benefits when they retire at age 60. Then, they sell the investment property, and pay no tax on the capital gains they've made. Alternatively, after entering pension phase, they could retain the property and pay no taxes on the rent they receive though their SMSF. The rent is however used to fund their regular income to support them through retirement, which is also received tax free.

Overall, this strategy has helped Rig and Taylor unlock their superannuation savings to invest into an asset class they love, to accumulate their longer term wealth in a tax-effective vehicle, and to help them achieve the lifestyle they want in retirement. A clever strategy for clever investors indeed!

The above is not advice. Do not act without our advice.

OUR UNIQUE SMSF CAPABILITIES

Matthew Ward, who is our Managing Director and one of our Senior Wealth Advisors, is an SMSF specialist and is regarded as a leading authority in this space.

Matthew sits on the SMSF Professionals' Association of Australia state chapter committee, has strong industry and stakeholder ties, is an accredited SMSF Specialist Advisor, and holds post-graduate SMSF qualifications with Adelaide University and a Master of Taxation and Financial Planning through the University of NSW.