Firm News | 02/28/2023

If you’ve been spending time in and around the real estate market, chances are you’ve heard of an SMSF, but do you know what it means? Let’s dive into self-managed super funds and how they can obtain special loans.

A self-managed super fund, more commonly known as an SMSF, is a type of superannuation fund. In general, superannuations are organisational pension programs that are created by a company for its employees. While many superannuation funds are managed by a super fund, you can manage an SMSF yourself.

Up to four people can be members of an SMSF and they all act as trustees of the fund, making them personally liable for all decisions made by the fund. They must comply with superannuation law as well as specific SMSF government rules and are regulated by the Australian Taxation Office. SMSFs are desirable for those who prefer long-term investments and the ability to align their interests with other members.

An SMSF Loan

Another benefit to an SMSF is the option to obtain a special home loan for an investment property. Essentially, the super fund is investing in real estate to lease out, and all of the profits are funnelled directly back into the SMSF to increase retirement savings for trustees.

Because this is a specialised loan product, there are many restrictions and guidelines that must be met. For example, the property cannot be acquired from, lived in, or rented out to any SMSF fund members or any of their related parties. In addition, rental income cannot be disposed of by a trustee or used as a pre-retirement benefit to any members of the fund. The profits from the investment property must be funnelled directly into the super fund.

Each SMSF is also limited to a single asset, and alterations cannot be made to the property until the loan is paid off.

These restrictions, however, should not deter you from exploring this unique financial product. For the right SMSF, this investment is an ideal way for you to grow and accelerate your retirement funds. If you are interested in learning more about self-managed super funds or the loan products that are available to them, reach out to us today. We can show you how our flexible SMSF loan products can be an ideal way to reach your investment goals.