If you are seeking to purchase an investment property with your self-managed super fund (SMSF), you should be aware of the terms associated with borrowing before devising a strategy.
The borrowing terms are much stricter within a super fund due to the superannuation rules referred to as Limited Recourse Borrowing Arrangements (LRBA).The first requirement of borrowing through an SMSF is that you cannot buy several properties under the one borrowing arrangement. Instead, it must be one single acquirable asset.
In addition, an asset purchased through an SMSF with an outstanding loan remaining cannot borrow money to “improve” the property such as significant renovation plans. Also, the legal
ownership of the asset is held in a separate holding trust until the loan is repaid. This ensures the other retirement investments in the SMSF are not placed at risk.
Those investors using SMSFs have flexibility when it comes to choosing a lender. A loan can be obtained from your business, family member, or a bank or lending institution, although if using a bank or lending institution you may be subject to high fees. It is important to consider cash flow beforehand as loan
repayments must be made from your SMSF, requiring sufficient funds.
Susan Flux, Brisbane
Since that time I known Tony and his team at Lee and Lee, they have provided me with outstanding advice and services regarding my personal, family and especially my SMSF borrowing setup for wealth creation and tax reduction strategies that have since led to financial independence.
I now very clear and feel confident on my future financial goals and taxation strategies and know they can be achieved with Tony's expert and professional help.
Shukri Barbara, Property Tax Specialists Sydney
Tony has impressed me with his technical knowledge and execution. He works with honesty and integrity and is generous in his dealings.
John Mu, Internet Marketing Strategist Gold Coast
Tony has the strategies which are helping me legally minimise tax. He has helped me in my personal development and wealth creation to build a multimillion dollar property portfolio.
If you want a hands-on accountant who knows his stuff...Tony Lee is the man!