“Can I use self managed super funds for buying property?” This is one of the most common questions that our clients ask us. The simple answer is yes, purchasing property through SMSF is possible. However, there are many things to consider, so we recommend consulting with a SMSF fund specialist like iCare Super to ensure you understand every aspect of this process.
iCare Super is your local self managed super fund property specialist. We understand the strict laws and rules that you must comply with in order for your property to legally continue providing you with the benefits that such a purchase enables.
Your self managed super fund property:
However, it is possible to use your SMSF to purchase a commercial property to act as your primary business location. You would pay rent to the SMSF based on the going market rate.
There are numerous benefits that come with using self managed super funds for buying property. These advantages can include:
A SMSF can buy any sort of property, however the purchase of a residential property must be an arm’s length transaction from an unrelated party. As to commercial properties, there is no restriction on whether you buy from a related party or unrelated party.
Superannuation Industry Supervision (SIS) now allows SMSFs to borrow to purchase real estate. This can be achieved by a limited recourse borrowing agreement between SMSF and banks or related parties. In the event of a loan default by SMSF, the lender only has recourse to the security property and cannot claim any other SMSF assets.
The rules do not prohibit the lender from being a related party. Therefore you and other members can lend money to your own SMSF to enable purchasing property through SMSF. The major lenders in Australia also are offering a range of loan products to SMSFs for investing in property.
It’s important to note that you cannot rent residential property from your own SMSF; however, in some circumstances you will be able to rent a commercial property if it is for business purposes. The rent will have to be at a market rate and the premises will need to be for running your business.
Always find out what fees and charges you might be up for when purchasing property through SMSF. Such costs could include:
iCare Super will disclose all fees and charges to ensure you’re never left in the dark when using self managed super funds for buying property.
At iCare Super, we have the right resources in place to assist you to apply for a loan to buy the property in your SMSF. If you’d like more control over your superannuation, or simply want more information on self managed super fund property purchasing, please contact us online or call us on (03) 9557 4079.