faqs

Frequently Asked Questions

An SMSF loan is used by a Self-Managed Super Fund to invest in property. The returns from this investment, like capital gains or rental payments, go back into the superannuation fund for retirement.

The requirements for SMSF loans when purchasing a property are specific and include:

  1. Residency Restrictions:
    • Trustees or individuals related to trustees are prohibited from residing in residential properties purchased through the SMSF.
    • ¬†Renting out properties bought through the SMSF by trustees or related individuals is also not allowed.
  2. Property Ownership Restrictions:
    • The SMSF is restricted from buying properties already owned by a trustee or anyone related to the trustee.
  3. Sole Purpose Test:
    • The property purchase within the SMSF must align with the ‘sole purpose test,’ which mandates that the primary goal of the investment is to provide retirement benefits exclusively to fund members.

Additionally, it’s important to note that an SMSF can have up to six members, all of whom must act as trustees. Consequently, each member bears equal responsibility for the fund’s decisions and its compliance with relevant laws.
These requirements ensure that properties purchased through SMSFs adhere to specific guidelines and purposes, focusing primarily on the provision of retirement benefits to fund members while outlining restrictions to prevent conflicts of interest or misuse of the investment.

For more information call us on 0410 598 828 or email us on czang@bestprofessionalfinance.com.au for free mortgage health checkup or for any loan enquiries.

  • Residential property purchases through SMSF typically require an 80% Loan-to-Value Ratio (LVR), necessitating a 20% deposit.
  • Commercial property loans via SMSFs usually have a 70% LVR, requiring a minimum deposit of 30%.
  • SMSF loan interest rates are typically higher compared to traditional home loans due to the increased risk associated with limited recourse borrowing.
  • The higher risk for lenders stems from the non-liquidity of property assets within SMSFs. Properties are harder to sell and access for their total equity or value compared to shares, making them riskier assets. Consequently, lenders perceive property within SMSFs as restricting cash access, potentially endangering the fund’s adherence to the sole purpose test.

For more information call us on 0410 598 828 or email us on czang@bestprofessionalfinance.com.au for free mortgage health checkup or for any loan enquiries.

Some lenders may require a liquidity requirement, stipulating that not all liquid assets (cash or shares) in the SMSF should be used for property purchase. They might impose a minimum, such as ensuring the SMSF retains 10% of the property value in either shares or cash after property settlement.