What is an SMSF?
A Self-Managed Super Fund (SMSF) is a private super fund that gives members full control over their retirement investments. Unlike retail or industry super funds, an SMSF allows investment in property, shares, term deposits, and more, following ATO regulations.
While SMSFs offer various investment options, this flyer focuses on SMSF property loans, a strategy that lets your superfund borrow to invest in real estate and grow long-term wealth.
What are the benefits?
- Lower Capital Gains Tax (CGT) – Typically capped at 10%, and it can even drop to 0% if you start a pension.
- Grow Your Wealth Faster – Leverage property to supercharge your retirement savings.
- Pay Off Your Loan Sooner – Use rental income and super contributions to clear your SMSF loan faster.
- Tax-Deductible Interest – Interest on your SMSF loan is tax-deductible, reducing your overall tax burden.
- Buy Your Business Premises – Your SMSF can invest in commercial property and lease it to your own business.
- A Steady Income Stream – Once the property is paid off, rental income can help fund your pension payments.
Essential Considerations for SMSF Borrowing
Borrowing to invest carries significant risks that should be clearly understood before proceeding. Depending on the type of loan, certain restrictions can be quite strict. For instance, your SMSF trust deed must explicitly permit borrowing for investment purposes, and it must be structured correctly to comply with regulations.
Additionally, there must be sufficient cash flow within your SMSF, such as regular employer or personal contributions, to cover loan repayments without straining your retirement savings. Establishing an SMSF loan also incurs initial setup costs and ongoing maintenance fees. These costs need to be carefully considered alongside the potential benefits, including long-term capital growth and tax advantages, to determine if borrowing through your SMSF is a suitable strategy for your financial goals. Always seek professional advice to ensure the approach aligns with your broader retirement plan.
Items to know before buying an SMSF property
A trustee may consider:
- Seeking independent financial and legal advice with respect to their SMSF borrowing money to purchase an investment property;
- Establishing the trust structures required for the loan, ensuring this complies with the relevant superannuation laws. The loan would then need to be taken out by the SMSF trustee; and
- Setting up a separate Property Trust, which will be the legal owner of the property.
To purchase the property, the SMSF can use the cash funds it has available and borrow the remaining amount plus other associated costs. The investment property will be the security for the loan.
The Property Trust becomes the legal owner of the property while the SMSF is the beneficial owner and receives the rental income. When the loan is repaid, the Property Trust will transfer the legal ownership of the property to the SMSF.
Why work with gold coast wealth
SMSF lending is complex, but we make it simple. Our experts ensure your loan is structured correctly and aligned with your wealth-building goals.
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- Specialist SMSF Experts – We navigate strict regulations to keep your loan compliant and optimised.
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- Access to Multiple Lenders – We compare options to secure the best rates and terms for your SMSF.
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- End-to-End Support – From setup to settlement, we handle the process so you can focus on growing your retirement savings.
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Unlock the potential of your super with an SMSF loan—build wealth, gain control, and secure your financial future with expert guidance from Gold Coast Wealth.
Gold Coast Wealth Pty Ltd ABN 55 677 524 551 Credit Representative 559826 is authorised under Australian Credit Licence 389328 Disclaimer: Document provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal; tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders credit assessment with terms and conditions, fees and charges and eligibility criteria apply.