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Milestone Financial Services ABN 68 100 591 508, trading as Milestone Lending Solutions is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, ABN 89 051 208 327 AFSL 232706. Any information given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any information, you should consult a financial planner to consider how appropriate the information is to your particular situation.
A Self-Managed Superannuation Fund (SMSF) gives you greater control over your retirement. As a trustee of your own fund, you have control over what the fund's assets are invested in, including the ability to invest in direct property, shares, or other non-traditional assets. Costs associated with the ongoing management of an SMSF are generally fixed and not determined as a percentage of the funds value. This is more cost effective for large superannuation account balances as these fixed costs may represent a smaller percentage of the fund's value when compared to the management fees paid on retail superannuation fund accounts. Self Managed Super Funds can give you higher levels of control and flexibility
As trustee, you have control over where the superannuation fund's assets are invested (within rules and guidelines).
SMSFs give you greater control over your retirement investments
You will have greater control over the tax benefits achieved within the fund by structuring the fund's investments to maximise tax effectiveness.
You can appoint service providers to administer the fund, and can control how the fees are managed.
If you keep your super fund until you have retired and are ready to draw down a pension, you may be able to eliminate any capital gains (even from any investment property held by the fund).
In order to invest in direct property in super, you must establish a SMSF. If you don’t have enough assets in the fund, you can borrow money via a limited recourse loan. This type of loan means that if the SMSF defaults on the loan, the lender’s rights are limited only to that property (not to other assets within the SMSF). It is important that the property is held within a trust (bare trust) in the SMSF and that the beneficial ownership of the property is the SMSF. The fund makes repayments against the loan and once the loan is repaid, ownership is held by the SMSF and the bare trust is no longer required.
Ensure your SMSF is established prior to the exchange of contracts. If you have an existing SMSF ensure the Trust Deed allows for direct property and gearing
Ensure all the Entities have been established prior to purchase including the bare trust and trustee.
Have a financial planner review your insurance needs based on the increased borrowings?
On the following page we’ve noted things to be aware of when purchasing a property via their SMSF and the process that is required to complete the purchase.
1
Establish your SMSF or review the Trust Deed (see above)
7
Property valuation
2
Pre-approval for finance
8
Holding trust completion
Have you consolidated your super into your SMSF? Is there enough cashflow into the fund to be able to pay interest and other expenses?
3
Property selection meeting
9
Documents sent out (may need signing)
Consult a mortgage broker to get pre-approval for your loan prior to making an offer. Include costs such as stamp duty and conveyancing fees.
4
LRBA kit to be ordered – Resolution minutes to be signed
10
Final consultation with lawyer, broker, financial planner, property consultant
Is the purchase on commercial ‘arms length’ terms? Will the rental arrangements be at ‘arms length’?
5
Conveyancing /exchange (settlement is usually 14 - 21 days after)
11
Settlement, post settlement administration
Has the property purchase been documented in the minutes of the trustee meetings?
6
Formal finance approval
Please note that establishment fees are as per Ascend Administration Services Guide. See www.ascendsmsf.com.au for more information.