I’ve had a good number of clients asking about Self-Managed Super Funds (SMSFs).
With the recent increase in interest rates, it’s made it more challenging for lending serviceability. This has ruled out purchasing an investment property for many.
However, some of our clients looking to build wealth in a tax-effective manner have been looking to their superannuation as an alternative.
An SMSF is able to diversify, borrow & purchase a direct investment property, which is something you cannot do with your standard industry or retail fund. By doing so, you can leverage your current super balance into a much larger asset (property)
Like all financial products, seeking good financial advice is in your best interest here. The rules for borrowing in an SMSF are different & it’s important to understand all of the pros & cons. There are also onerous responsibilities & administrative obligations. An SMSF is not for everyone.
My wife and I have just recently set up an SMSF with the help of our financial planner who has helped us navigate the red tape and feel certain that we are compliant, and after going through the process I can say with certainty that there is no way I would have done it without his guidance. There is an added layer of complexity to setting up an SMSF and ultimately buying a property with your SMSF, and there is quite a lot of “you don’t know what you don’t know” that can be resolved by having the right advice.
If you’re considering going down this path, you should ideally have a total SMSF balance of $300k (can be a total balance if combined with someone else) and have payments going into your superfund which can include (or solely be) the super guarantee paid by your employer or annual contributions, etc.
If this is something you’re interested in and would like to know your potential borrowing capacity, please feel free to book a time to chat with me here – https://calendly.com/joelwyld/general-phone-discussion
Warning – Your Superannuation fund is an extremely important asset and is highly regulated, and any decision you make should be done so with the highest consideration. Whilst financial advice is not necessarily compulsory, it’s something you should strongly consider as the penalties for non-compliance can be severe.