SMSF LOANS - Maximise the growth of your SMSF property investment portfolio.
Some of the benefits include:
- Gearing: Using borrowed funds to make greater gains is one of the most effective long-term wealth builders available. The fact that your super fund can now borrow to buy property enables you to make use of this time-honoured strategy to increase your wealth without affecting your personal cash flow.
- Affordability: You may not be able to afford to buy another investment property or even your first investment property in your own name. However, given a reasonable personal super balance or a combined family member balance, you might be able to use the funds in your super to pay a deposit on a property and secure an SMSF loan to purchase investment properties within your own personal super fund.
- Cash flow options: When purchasing property using your super, the interest payments on the SMSF loan could be totally supported by the rental income and your normal compulsory employer contributions to the fund. This leaves no extra burden on your current household cash flow. Buying property through your fund might be a way for you to achieve your goal of owning an investment property or even owning your own business premises.
- Asset protection options: Buying property within your super fund can be an excellent way to reduce overall risk on your investment portfolio. Assets held in super funds are protected against some legal claims, depending on your personal circumstances.
- Choices for business owners: If you purchase your business premises through your super fund and then lease it to your business, the rent you pay to your super fund is tax-deductible to your business. Paying rent to your own super fund is a great way to accelerate your retirement savings without exceeding the concessional contribution limits. In fact, you may be able transfer commercial property that you already own into your super fund which allows you to unlock cash to invest in your business or in other assets.
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