The Pros and Cons of SMSF Loans



However, simply jumping on the bandwagon is never a good idea when it comes to something as important as financial investment for the future.


Pros of SMSF loans



One of the primary benefits of buying property with an SMSF loan is preferential tax treatment.


If you purchase a property through your super fund and wait to sell it until after you have retired and your fund has reached the pension phase, you will not have to pay tax on capital gains.


Additionally, you will not have to pay tax on rental income if you decide to rent the property out.


Before this phase, however, capital gains and rent are only taxed at a rate of 15 per cent, which drops to 10 per cent on capital gains if the property is held for a year or longer.


Cons of SMSF loans



For most home buyers, the biggest disadvantage concerning SMSF loans are the limitations on how the property can be used.


For instance, a property bought through your super fund cannot be lived in by you or any of your friends or relatives.


Also, there are strict rules regarding renovations to properties purchased through an SMSF. You have the ability to fix your home, but not improve it.


Choosing the best option



Whether or not an SMSF loan is right for you comes down to why you’re looking to purchase a property and how you plan to use it.


It’s important to determine what option works best for you before applying for an SMSF loan.

However, if you are in the market for self managed super fund loans, contact the specialists at Redrock.