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Can I buy property for my SMSF that I already own personally?

Friday, July 27, 2012

Can I buy property for my SMSF that I already own personally?

In some instances yes, it will depend on whether the property is residential or commercial. You can buy a commercial property that you already own and even borrow against it as long as you meet the borrowing criteria i.e. a maximum LVR of 72% for residential property and 63% for Commercial Property.

If you want to buy a residential property then it must be at arms length and not currently owned by a related party, it must be purchased from and leased to an unrelated third party.

Buying Property through a SMSF

Friday, July 27, 2012

Buying Property through a SMSF

If you are looking to control your Super and are unhappy with your Industry Super Fund returning consistent poor or negative returns like many other Australians you now have more options in regards to a SMSF.

In 2007 the Australian Government made it possible for ordinary Australians to borrow money to buy property in their SMSF.

Before setting out on this journey you must ask yourself 3 simple questions as everyone's goals will differ and each of us is in a unique financial position.

  1. Do you have an Existing Industry or Platform Based Super Fund with a combined minimum balance of $80,000?
  2. Are you looking to control your Super Fund Investments?
  3. Are you looking for a low cost Self-Managed Superannuation Fund Solution?
  4. If so contact us at WFS Canberra for your free SMSF Consultation to see if buying a Property in an SMSF will work for you.

Why not own property through a SMSF?

Friday, July 27, 2012

Why not own property through a SMSF?

Many people feeling depressed and out of control due to the recent turmoil in global financial markets are looking for different ways to invest their superannuation.

How does a SMSF work?

It works very much the same as a other superannuation funds. It accepts contributions from members, and invests and manages those contributions and subsequent earnings.

You become the trustee of the SMSF and are involved in all the decision made by the fund. This means you are responsible for tasks such as administration and accounting, managing tax implications and ensuring an investment strategy is in place. However, SMSF professionals at WFS Canberra are able to complete all of the administrative tasks for you and assist you in every aspect of running your fund.

What are the benefits of a SMSF?

- You have control over how and where and when your money is invested.
- There can be fee savings if you use the services of WFS Canberra.
- The potential to use tax savings strategies not possible in other types of funds.
- Purchase your business' real property.

- Puchase residential investment property

Amendments to the Superannuation Industry (Supervision) Act 1993 ("SIS Act"), effective from 24 September 2007, allows superannuation funds to borrow money to acquire any asset which a SMSF is permitted by law to acquire directly, which includes Property

Case Study: Borrowing to Purchase Residential Investment Property


Josh is 48 years old.
Josh is looking to purchase an investment property for 400,000 (net 5% yield).
Josh wants to fund the investment property through an quity line of credit against his principal residence.
Josh has accumulated $200,000 in superannuation and has a SMSF.
Josh could fund the investment property purchase though his SMSF with himself as the lender to his SMSF.



The benefits of Josh owning the investment property in his SMSF are substantial:


                                                        Individual                                 SMSF

Rental Income (30yrs)                          $878,054                                $878,054
Interest Expense (30yrs)                      ($780,000)                              ($585,000)
Rental Tax Liability/Benefit (30yrs)        ($40,692)                                ($9,921)
Capital Gain on Property                      $418,563                                 $418,563
CGT Payable                                      ($86,852)                                 $0  

Total Return                                        $389,073                                $701,696

Structure Benefit                                                                              $312,623

* Key Assumptions:
5% rental yield
2.5%pa rental growth
5%pa capital growth

Tax Minimisation

Wednesday, June 27, 2012

Individuals looking to maximise their superannuation dollar, who will earn less than $61,920 in the 2011/12 financial year should look to make an after-tax contribution to their superannuation to qualify for the Government Co-Contribution.

At present the government will match after tax contributions dollar for dollar up to a maximum

of $1,000 for a person earning up to $31,920. The maximum then reduces by 3.333 cents for every dollar of total income, less allowable business deductions over $31,920 reducing to nil at $61,920.

From 1 July 2012, the maximum co-contribution payable will be halved to $500 a year

SMSF and Property

Monday, June 18, 2012

Hello All,

First you tube video has been uploaded:


Topics include Loans in SMSF. Property in SMSF, CGT in SMSF advantages in SMSF and DIY super. 

Hope you enjoy it!

feel free to suggest topics you would like me to discuss.




Tax Saving Strategies / Super

Friday, June 15, 2012
If you have any spare cash now is a good time to consider boosting your 'concessional' superannuation contribution before 30 June.  Any contribution made is tax deductible and can save you tax.  Employee's need to contribute via salary sacrifice whereas self employed or retirees can contribute directly.   From 1 July onwards the contributions cap for over 50's is reducing to $25,000 so now is the time to consider whether to take advantage on the higher $50,000 cap that applies until June 30. For more information visit

SMSF and Property

Friday, June 01, 2012

  A new battalion – property and superannuation join forces?


Since time immemorial it has been argued as to whether the benefits of gearing property investments outweighed the tax concessional environment offered by superannuation.  Now the battlefield has changed dramatically.  Why would you choose one over the other when you can have the best of both worlds.  New laws introduced in September 2007 allow Self Managed Superannuation Funds (SMSF’s) to, for the first time, buy geared property in a simple and uncomplicated manner.  SMSF’s can now select a property of their choice, be it residential or commercial, and borrow up to 80% of the value of the property. 


The most common investment strategy seen in the baby boomer era was to invest all surplus funds into accessible investments including property and shares and then cashing these in and contributing the funds into super just prior to retirement.  The only disadvantage of this strategy was a potentially very large Capital Gains Tax bill. 


However, this strategy has been dramatically hampered by the Governments new contribution rules which only allow $25,000 of concessional contributions per year.  


The effect of the new contributions rule is to significantly disadvantage generation X and Y.  It is fair to say that most young singles and young families have better things to do with their money and more pressing needs than to make the most of their $25,000 per year contribution limit.  Then when they are getting closer to retirement and have more surplus funds they will be prevented from, like their pre-decessors, making large contributions just prior to retirement.


Why would you buy property in a SMSF instead of personally?


For many reasons including;


  • you get the benefit of ‘leverage’,
  • a maximum of 15% tax on any rental income in excess of costs,
  • you receive a tax deduction for the loan repayments of principal (which is normally impossible) via salary sacrificing the amount required to cover the shortfall,
  • asset protection – the asset is protected from creditors in the event of a lawsuit or bankruptcy (some conditions apply),
  • the property can still be sold and the loan repaid at any stage,
  • any capital gains on the property when sold will be taxed at a maximum rate of 10% (if asset held for more than 12 months)
  • But the biggest incentive of all – if you keep the properties until age 60 and commence a pension from the fund,
  • any capital gain on the property will be TAX FREE,
  • any rent on the property will be TAX FREE,
  • any income paid out to you will also be TAX FREE.


The laws are only new and law complying products are now being introduced and marketed.  It is envisaged that these products will hit the market like a storm once investors realize the potential.  SMSF's are now the largest segment of the superannuation industry and it is likely that this figure will increase exponentially once knowledge of the loan products becomes widespread.  It is also interesting to note that this may be the first time in history that all advisors (financial planners, accountants, auditors, property advisors and mortgage brokers) have a common ground for advising clients.  All advisors have something to gain by assisting clients into these products. It’s not only a busy time ahead for advisors but a time to join forces and put a cease fire on the battle.


The team at Wholistic Financial Solutions can assist all trustee of SMSF’s consider this option in regards to borrowing to buy property within their super fund.   Come along to our free information seminar or request a free consultation to discuss your personal situation.  Call Catherine on 02 6162 4546

Buying property in an SMSF

Saturday, December 25, 2010

Is it worth setting up an SMSF?

Sunday, December 19, 2010
People have been asking whether it is worth setting up an SMSF. Any questions you have I would be glad to answer them.

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