04 Nov 2021

How Does an SMSF Loan Work?

Self-managed super funds are one of the most popular ways Australians are choosing to fund their retirement. With an SMSF, the members (also known as trustees) have control of their retirement money. They can choose to invest where they want to. Most SMSFs have between two and four trustees, but some can have up to six. The trustees can use the money within the fund to invest in several different asset classifications, including property. Some lenders offer SMSFs loans to help super funds purchase assets, such as an investment property. 

Basics of Self-Managed Super Fund Loans

Due to the COVID-19 pandemic, traditional lenders, such as banks, have stopped offering SMSF loans. However, non-traditional lenders, such as Mortgage House, still offer these unique loans. 

SMSF loans allow the fund to invest in property, provided they comply with the restrictions and guidelines set forth by the Australian Taxation Office. These restrictions include:

  • Not buying the property from any member of the fund
  • No fund member or their relatives can live in the home

Income generated from the property is placed directly back into the fund, helping to provide for the retirement of fund members. Unlike other rental income, rental income from SMSF loans is only taxed at 15%. Likewise, capital gains are only taxed at 10%. 

If you are interested in securing a loan to enable your SMSF to purchase investment property, the experts at Mortgage House can help. We can help you fill out the application and complete the proper paperwork, allowing you to invest in your retirement the way you want to.

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