Self Managed Super Funds (SMSF)

Loans for SMSF

Introduction

There are significant advantages to having a property in an Self Managed Super Fund (SMSF) with the most obvious being the tax rate for income derived in your super fund being taxed at a considerably lower rate than income tax (namely 15%) as well as the choice to control your investments and your future investment strategy.

SMSF’s are able to borrow funds via what  has been defined by Superannuation legislation as a “Limited Recourse Borrowing Arrangement “(LRBA) which describes a loan/arrangement which has a limited recourse for the lender against the borrower in the event of default, to the single asset purchased using the specific LRBA  – thus protecting the other assets that sit inside the SMSF.

Each asset purchased using an LRBA must be housed inside what is known as a “Bare Trust”

intro-SMSF
Key Issues to Consider

Investing in property within your SMSF isn’t for everyone (it may limit for instance the asset class weights inside the fund and thus create unnecessary risk – in other words, illiquid assets such as property may not be appropriate for your risk profile but, if you want to review the opportunity then the following key issues need to be considered:

  1. Does borrowing fit with your investment strategy?
  2. Does your trust deed even permit borrowing?
  3. Is the asset class (eg property) allowed in your SMSF via the trust deed?
  4. What expenditure is allowed?
  5. Bare trust deed requirements
  6. Borrowing to buy a commercial property
  7. Borrowing to buy residential property
  8. Limitations
  9. Costs of establishing an SMSF
  10. Seek financial advice.
Loan Type Options

Limited recourse borrowing arrangements that could include loans such as:

Complimentary obligation free consultation

Discuss your specific needs & formulate the right strategy for you.
Get in touch to organise your complimentary 60min session today!

What’s involved in obtaining a loan through Intuitive Finance?

Process begins

Step 1
Consult

Initial consultation (via the phone, skype or face to face) where we establish your motivations and requirements

Step 2
Gather

Information gathering to confirm your financial status

Step 3
Review & strategise

Clear and detailed review of your financial position with a suggested investment or buying strategy for you to consider including an assessment of the best and most appropriate deals available

Step 4
Agree & Implement

Complete the necessary application paperwork including follow-up negotiations with lenders and adjustments if necessary

Step 5
Complete

Finalise approval (s), arrange formal paperwork to be signed

Step 6
Settle

Coordination of the settlement process
Process ends
cover-guide-SMSF-mockup

An Introduction to some of the Key Finance Issues all Self Managed Super Funds need to consider

Download this handy guide that the team at Intuitive Finance has put together for you.

Instant download