How to Buy a Sydney Property Using Your SMSF

sydney property smsf

Buying a residential or commercial property using a self-managed super fund or SMSF is becoming popular in Sydney. It is a good way to buy property if you don’t have enough funds in your own name, and you don’t want to get a conventional property loan from a bank. It is also an effective way to diversify your investments under your super.

By using your SMSF, you can gain more flexibility for your property investments. You can directly invest in a residential or commercial property by using the funds that you have already accumulated in your super. You can also decide which property to buy, manage the rental income from the property, and decide if you want to sell the property.

However, you must carefully consider this decision as it involves your retirement fund. You should make certain that using your SMSF supports your long-term investment strategy and avoid risks.

But First, You Should Know the SMSF Rules

You must first understand the rules governing superannuation before you can invest in property using your SMSF. Take note of the following SMSF rules:

  • The property should pass the sole purpose test, which means that the property should provide you income for your retirement
  • The property should not be acquired from your relative
  • You or your relative should not live in the property

However, you can use your SMSF to acquire your own commercial properties, which will allow you to directly pay the lease to your SMSF according to the prevailing rate in the market.

Costs Involved in Buying Sydney SMSF Property

Be sure to look at the different fees and charges involved in buying a property in Sydney using your SMSF. Take note that these fees will add up and may reduce the balance in your super. Be clear of all the costs before you sign up such as legal fees, stamp duty fees, property management fees, upfront fees, bank fees, and advice fees.

It is crucial to seek independent advice for SMSF property investment. Make certain that your chosen SMSF adviser holds an Australian Financial Services Licence or AFSL.

Taking SMSF Loan to Buy Sydney Property

If you are interested to buy a property for investment, but you have not accumulated enough super, you can take out an SMSF Loan Sydney. Most lenders will require your SMSF to have a corporate trustee, and generally allow your super to take out a loan equivalent up to 80% of the property value.

Take note that you can use the SMSF loan proceeds to buy one asset only – either a commercial or a residential property. Hence, you must carefully assess whether the investment fits your investment strategy before you sign up for a Sydney SMSF loan.

Because of the complex nature of superannuation laws that govern SMSF, you should obtain expert advice on purchasing real property as well as the structure of your SMSF to enable it for borrowing.

Focused Financial Advice is a trusted SMSF loan broker Sydney. Call us today on 02 9003 0611 and talk with our professional finance Adviser on how you can use your SMSF to buy a Sydney property.


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