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Use Your Self Managed Super Fund to Borrow & Purchase Property |
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Written by Scott Crowther
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Thursday, 03 April 2008 |
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Recent amendments to the Superannuation Industry Supervision Act (SIS ACT) in September 2007 now allow a super fund to borrow and charge their assets as long as a special structure is used. This means that your Self Managed Super Fund can now borrow to purchase real estate.
Australians have significant amounts of money held in superannuation and more and more people are setting up Self Managed Super Funds. Many people want to be able to use their superannuation to invest in real estate but until recently have not been able to do this because a SMSF has not been able to borrow. Under the new section 67 (4A) of the SIS ACT, SMSF's can borrow providing the following conditions are satisfied: The borrowed funds are used to purchase an asset (e.g. real estate) The asset is held on trust for the SMSF by another entity (ie the Property Trustee). The SMSF must have the right to acquire legal ownership of the asset by making payment. The lender’s recourse against the SMSF must be limited to the underlying asset (ie the purchased property). The lender must not have a right of recourse against other assets of the fund. This change to the SIS ACT represents an incredible opportunity to anyone that has money in superannuation and has been considering purchasing an investment property. If you would like more information regarding Self Managed Super Funds borrowing please contact Scott Crowther by clicking here. |
