top of page

Super Fund Home Loan

 

Use your Self-Managed Super Fund to buy residential investment property

 

  • A Super Fund home loan is a great option if you already have an SMSF, or if you’re planning to establish an SMSF and are interested in buying a residential property. Borrowed funds may also be used, towards ‘repairs’ and ‘maintenance’ of the property, however ‘improvements’ are not permitted

  • Purchasing an investment property with borrowed funds needs to be consistent with your SMSFs investment strategy

  • Your SMSF Trust Deed needs an express power to borrow

  • A limited recourse loan, so other assets of your SMSF are protected

  • You may be entitled to receive income tax and negative gearing benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under the Superannuation Industry (Supervision) Act 1993(Cth) (SIS), a trustee of a SMSF is allowed to borrow to purchase residential investment property. It’s important to remember that investing in property with your SMSF is a long-term investment strategy, and it’s best that you get independent financial advice. If you have questions about Super Fund Home Loans, a n1 finance home loan expert can help.

 

Who is eligible?

  • Australian residents planning to establish an SMSF and those who already have an SMSF

  • Australian residents who have an established SMSF investment loan on a residential property in Australian (established after September 2007)

  • Your SMSF may be used to purchase residential investment property in Australia. The purchase must be on an arms-length basis from a person or entity unrelated to the members of your SMSF

 

How it works

  • You have set up a SMSF or you are planning to do so. If you haven’t yet set up a SMSF, your accountant or financial advisor will be able to assist you. For basic information, visit the Australian Taxation Office Self Managed Super Fund webpage.

  • Ask your accountant or financial advisor about the benefits of borrowing to invest in residential investment property with your SMSF. We can help you with establishing a Super Fund Home Loan at a St.George branch.

  • How the SMSF purchases a property:

 

Step 1: The trustee of your SMSF needs to confirm that purchasing an investment property with borrowed fund is consistent with the SMSF’s investment strategy and the SMSF Trust Deed expresses that borrowing is allowed

 

Step 2: The trustee of your SMSF selects a residential investment property to purchase.

 

Step 3: The trustee of your SMSF appoints a Custodian to purchase the residential investment property on its behalf.

 

Step 4: The trustee of your SMSF applies for a Super Fund Home Loan and provides documentation to lenders.

 

Step 5: The trustee of the SMSF seeks financial advice from an accredited SMSF financial planner and has an SOA completed which confirms that purchasing an investment property with borrowed fund is consistent with the SMSF’s investment strategy meets the risk profile of the SMSF members – a Financial Advice Certificate will need to be provided as part of the credit criteria

 

Step 6: The Custodian pays the deposit and exchanges contracts on the purchase of the residential investment property.

 

Step 7: If one of our lenders approves the loan, your Custodian mortgages the property to the lender to complete the purchase.

 

Step 8: The trustee of your SMSF pays the legal costs and stamp duty on the purchase.

 

Step 9: Once the loan is advanced, the trustee of your SMSF collects rent, pays the usual outgoings on the property and makes the loan repayments. It manages the property in the same way as any other real estate investment.

 

Step 10: The property is held in trust and once the loan is repaid, the legal title may be transferred from the Custodian to the SMSF or the property may be sold.

 

 

 

 

 

 

Key benefits

  • Property held in a SMSF is a limited recourse loan, where the amount that we may recover on default is limited to the secured property itself and all other assets of your SMSF are protected

  • Use rental income to assist in repaying the loan

  • You may be entitled to gearing benefits – offset loan interest and expenses against rental income and income tax benefits – concessional tax rates on income after expenses.

bottom of page