Purchasing property through with a self managed super fund loan can be a great way to help you secure real estate for your future. However, it’s important to consider the various guidelines that need to be observed before entering the market.
For example, buying real estate with an SMSF loan is done in a similar way to normal transaction except that you need to be able to prove that the purchase is being made to facilitate retirement savings for the SMSF members. Therefore, ensuring you find a slice of real estate that has the potential for capital gains and/or a steady stream of income from rent is essential.
You look into the market as normal and select the best property for your needs. However, an important thing to remember is that residential property needs to be purchased from an arm’s length vendor and meet the sole purpose test. This means the property can be maintained only to provide for retirement. Any financial gain earned outside of this – or if the property is used for occupation by SMSF members – could violate this test.
This also extends to things like using the property as a holiday home or any other type of benefit prior to retirement. These measures are in place to help avoid fraudulent behaviour from occurring, with legal restrictions helping to keep the system as safe and secure as possible.
Get in contact with the team at Redrock to discuss the various rules and regulations surrounding the use of SMSF loans for property investment in the near future. With the population expected to continue rising at an accelerated rate in the coming years, purchasing investment property could be a brilliant move to make to fund your retirement.