Getting it right before taking out an SMSF loan

Self managed super fund loans can have many benefits, as well as be a great way to obtain much-needed funds for a retirement investment.  However, as with any type of loan, it’s important to understand all the ins and outs.

The easiest and most effective way to accomplish this is to get advice from qualified professionals.

Considerations for SMSF loans

There is no shortage of factors to keep in mind when taking out an SMSF loan.

However, the first and foremost concern is likely how to structure an SMSF.

Borrowers can have a corporate trustee, where each member of the fund is a director of the trustee company, or opt for individual trustees, where each member is a trustee.

Each choice comes with its own pros and cons, so it’s important for borrowers to determine which option suits them best.
Unfortunately, this is far from the only important decision borrowers will have to make regarding their SMSF.

Investment strategies, the types of assets that can be purchased, insurance recommendations, beneficiary nominations – borrowing through an SMSF concerns much more than simply finding a house and applying for a loan.

Despite this, the benefits offered by SMSF loans are plentiful.

An SMSF can acquire property worth more than its available funds by using gearing.

Interest expenses can be claimed as tax deductions by the SMSF and help to reduce tax liability. Assets are better protected since lenders don’t have access to an other assets in the SMSF in the event of a default.

However, without proper guidance from experienced professionals, it can be easy to make costly and time-consuming mistakes.

If you’re considering a self managed super fund loan, contact the specialists at Redrock.