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You Can Use Your Super as A Deposit for an Investment Property

Boost your retirement plans and take over your superannuation management by purchasing investment properties using your funds as the deposit. Once the domain of wealthy baby boomers, now younger Australians on average incomes have begun using self-managed superannuation funds (SMSFs) to invest in property. Some have realized that their current retirement strategies may not meet their lifestyle preferences when they reach retirement.

Like other superannuation funds, also known as super funds, self-managed super funds (SMSFs) are a way of saving for your retirement. The difference between a SMSF and other types of funds is, generally, that members are the trustees of superannuation funds they own. This means the members of the SMSF run it for their own benefit.

Benefits of Self-Managed Super Funds

People set up their own SMSF for control, flexibility and personal investment choice. You get to decide on your fund’s investment strategy and choose what your fund invests in and, like all super funds, the tax rate of an SMSF is 15 percent.

You can only buy property through your SMSF if you comply with the rules.

The property:

  • Must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members
  • Must not be acquired from a related party of a member
  • Must not be lived in by a fund member or any fund members’ related parties
  • Must not be rented by a fund member or any fund members’ related parties

Loans for residential property

Purchase residential investment property – SMSFs can use borrowed monies to assist in purchasing a residential investment property within the super fund. The property must be held in trust for the SMSF until the loan is repaid.

Security of a limited recourse loan – rights of recovery against the SMSF are limited to the secured property. All other assets held in the SMSF are protected.

Potential gearing benefits – it may be possible to claim the interest paid on the loan and expenses as deductions against rental income for tax purposes.

Rental income can be used to demonstrate serviceability – rental income from the investment property can be used to repay the loan.

Integrates easily with existing SMSFs – the loan structure is designed to easily integrate with most SMSFs.

Learn More about Access to Superannuation Funds for Investment

For a confidential discussion about your SMSF Investment needs give one of our specialist Brokers a call. We’d be happy to discuss your needs and how you can grow your retirement funds.

Contact Deb on 02 4940 4602