10 Mar 2021

SMSF Loans: 2 Things You Should Know about this Home Loan

SMSF Loans: 2 Things You Should Know about this Home Loan

There are several ways to fund a retirement including an SMSF. SMSF loans complement the fund and help the trustees purchase property. This loan works in tandem with a self-managed superfund. The loan consists of several regulations to ensure it is used as intended. Here are some things you need to know.

What is an SMSF?

An SMSF gives the trustee control over their retirement funds. Australians wanted the opportunity to manage their retirement funds instead of letting others do it for them. One to four trustees make up one fund. Once it has been funded, the trustees have the ability to invest in a range of assets including real estate. Trustees are allowed to borrow against the fund, too. The exact tax and other financial implications should be discussed with a tax professional. They may differ from one individual to the next.

How Do SMSF Loans Work?

An SMSF loan is used to invest in property, and it includes a few restrictions. Any income earned from the property goes directly back into the fund.  The property cannot be acquired from a fund member nor can it be lived in by a member. This maintains integrity of the loan and fund. All earnings from the property can be accessed once the trustee reaches retirement age.

Rental income is only taxed at 15% and capital gains is only 10% if kept for at least one year. However, in retirement and receiving a pension from the fund becomes tax free. You get to keep all your money.

The loan process is the same as others. Applicants are expected to submit completed paperwork and other information.

SMSF Loans Conclusion

The Australian housing market offers investment opportunities in all conditions. SMSF loans are great for those interested in obtaining a property to fund their retirement. To learn more details, contact our Mortgage House team.


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