What is a Self Managed Super Fund (SMSF)?
A Self-Managed Superannuation Fund (SMSF) is a tax structure that allows people to control their own superannuation investments in preparation for retirement. A SMSF allows you to invest in a very broad range of directly held assets and investments including direct property and direct equities.
For larger superannuation balances the fees are generally lower than retail super funds, and the flexible nature of SMSFs allow you to benefit from the significant tax advantages that superannuation provides.
The SMSF can have up to four members so you can include your family, giving the fund more to invest and keeping fees lower for everyone.
Setting up an SMSF is a major financial decision and you need to have the time and skills to do it. If you set one up, you’re responsible for running it in accordance with the law and reporting to the ATO on its operation. A correctly structured and efficiently run SMSF can deliver substantial benefits, which is why it is important to receive professional advice and partner with the right experts.
Who are the SMSF experts?
Niche Finance on the finance and loan front and our SMSF specialist advisers are!
Our SMSF specialist advisers provide a comprehensive SMSF Accounting, Compliance and Administration service. They take care of the fund setup if you’re looking to establish a fund. If you have an existing SMSF they can assist you to transfer your fund to their service. They handle the fund’s paperwork – tax returns, member contribution statements and the annual audit.
You will have direct access to your own specialist SMSF Adviser, personally tailored investment advice and you also have access to strategic financial planning and investment advice from our specialist SMSF Advisers, including advice on the appropriate structuring of a direct property investment within an SMSF.
Property in SMSF
Investing in property is a widely adopted way to create long-term, sustainable wealth. Now you can take advantage of these great benefits using your superannuation:
- Increase your investment property portfolio without impacting your take home pay
- Take control of your superannuation through direct property investment
- Preserve your already hard-earned superannuation
- Sell an investment property and pay zero capital gains tax (CGT)
- Receive rental income tax free
- Take control of your self-funded retirement
The good news is that yes it is possible and also relatively easy with the right advice.
Our SMSF specialist advisers would generally recommend that you have at least $150,000 in super for buying property in an SMSF to be viable. However if you do not meet minimum requirements specified here, Our SMSF specialist advisers are able to help with alternatives to achieve an investment in property via superannuation.
It is also important to consider adequate diversification in any superannuation investment to ensure that your wealth is protected from adverse market movements. Investments inside an SMSF are not protected by the same government compensation scheme that protects retail superannuation balances.
Our SMSF specialist advisers suggest an SMSF is the only investment vehicle that allows you to invest in direct property assets using your Superannuation. Once within the SMSF, the property will attract tax on rental income of no more than 15% and capital gains tax of no more than 10%. Once the SMSF is in pension phase no tax may be payable on the property at all.
SMSF Property Process
Step 1: Strategy meeting
In the initial meeting, our SMSF specialist advisers will discuss the SMSF gearing strategy specific to your personal situation and develop a plan of action for your investment property purchase.
Step 2: Implementation
You’ll receive a formal written Statement of Advice detailing the recommended financial strategy from our specialist adviser with regards to:
- a purchase price that is achievable
- a loan value that is appropriate
- a repayment schedule that has been stress tested and meets your retirement savings goals and objectives
Step 3: Gearing structure setup
Our SMSF specialist advisers will liaise with their legal team to establish the nominee company and bare trust to hold your investment property, as well as ensure all necessary minutes are complete to facilitate this structure within your SMSF.
Step 4: Finance arrangement
Our SMSF specialist advisers will work with a specialist SMSF lender and assist with the preparation and submission of an SMSF loan application form with all supporting documents to obtain conditional loan approval.
Step 5: You are now ready to purchase a property
Niche Finance will work with your licenced property professional to ensure that an appropriate price range (and LVR) is set that fits with the overall strategy as set out in the SoA.
Step 6: Settlement and ongoing administration
Our specialist SMSF Advisers can assist in the settlement of your property purchase and integration into your SMSF. After settlement, our Our SMSF specialist advisers team will provide ongoing administration and complete and comprehensive management of your SMSF.
Some of the rules
There are strict rules you need to follow when purchasing residential property including:
- You can’t purchase property from yourself or a related party (friend, relative, spouse or former spouse)
- You can’t stay in the property or lease it to a related party (it must be for investment purposes only)
Next steps
There are a number of important steps involved in an SMSF gearing strategy. To complete the process, we will put you in touch with our specialist SMSF Advisers who will guide you through the process from start to finish.
Want to know more?
If you would like to discuss or find out more about Niche Finance, please contact us directly or email info@nichefinance.com.au
You can also download our free brochure here.
Please contact us for details on our preferred SMSF specialist adviser.