SMSF Loans | Comprehensive Guide to Securing SMSF Loans and Borrowing

Exploring Property Choices for SMSF Portfolio: A Comprehensive Guide

SMSF Loans?
How they Work

What Types Of Property Can You Purchase

My SMSF Property Rental Manager Software
SMSF Loans

Types Of Funding

There are 3 three types of funding mechanisms
The SMSF Lending Criteria is complicated and getting harder to navigate. With over 11 years’ experience, we can help you navigate this space, with the help of our key broker partners, to assist you to acquire a property with the least amount of stress and worry.
Lending policies for SMSFs vary between lenders, particularly in the way they assess your ability to repay the loan.

How Do Lenders Assess My Borrowing Capacity?

These are the 3 key things to consider
The main hurdle encountered by most SMSF applicants is proving that there is sufficient income in the trust to support the loan.
Typically, the banks will look at the current income of the trust based on its previous two years tax returns and will then assess if that income plus the proposed rental income will be sufficient to service the debt.

Some lenders can also use the income of members or beneficiaries of the SMSF to support the application if a personal guarantee is provided.

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SMSF Property Do’s and Don’ts

These are examples of SMSF property strategies that are harder to get funding for
You cannot sell a residential property you own or one a relative owns to your SMSF
You cannot renovate a SMSF property with a separate loan
You can buy commercial property and sell a commercial property you own to an SMSF funding is more expensive for commercial than resi property

SMSF Lending FAQs

Yes, SMSF loans can be used to buy residential property, provided it complies with LRBA and ATO rules.

Yes, but only if it’s a commercial property and the lease is conducted on an arm’s length basis.

Interest rates for SMSF loans are typically higher than regular loans due to the limited recourse nature.

Borrowed funds can only be used for property repairs and maintenance, not improvements or renovations.

SMSF loans are serviced using

  • rental income
  • super contributions
  • interest/dividends/PAYG variation rebates

SMSF Risks

Setting up an SMSF is not for everyone Here are some things to check, before you set one up

SMSF Risks

Setting up an SMSF is not for everyone Here are some things to check, before you set one up

SMSF Risks

There are special rules governing how super funds must be run:

SMSF Risks

There are special rules governing how super funds must be run:

SMSF Double Stamp Duty Risk

SMSF Property deals run the risk of triggering double duty. As the Bare Trustee owns the property, whilst the loan is in place, the super fund is only a beneficial owner. Once the loan is paid off, the property must transfer to the SMSF and the title of the propertymust be changed to the SMSF trustee.

If these arrangements are not attended to correctly, double duty may be imposed on the fundand its members when these steps are undertaken.

Stamp duty will be payable on the initial transfer from the property vendor and when the property transfers from the Bare Trustee company to the SMSF trustee company. Some lenders use their own custodian structure, so the transfer of title upon completion of the loan may also attract additional stamp duty charges! Unbeknown to the SMSF members. This highlights the importance of getting the right advice with these arrangements,
before selecting a lender.

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