Using Super to Buy Investment Property is a popular strategy for people in the wealth building stage of their life. It can provide tax benefits and asset protection, as well as potentially helping to pay off the loan via rental income and future super contributions.
Can I withdraw money from my super?
A SMSF is a great vehicle to purchase an investment property, as the fund can access finance through a limited recourse borrowing arrangement (LRBA). This means that the lender can only go after the property in the separate trust if the SMSF fails to pay back the debt for the property, not your personal assets or other funds in the SMSF.
SMSFs can also make further investments in the property like renovations, extensions and improvements which can increase the value of the property. These investments are typically made using cash which can be sourced from within the SMSF or other SMSF investments.
Purchasing a property inside an SMSF can be a good strategy for anyone in the accumulation phase, however, it is important to understand the rules and costs associated with doing so. This is a complex area and it’s best to speak with an experienced MGI adviser before making any decisions.
It’s important to note that the information provided in this article does not take into account your objectives, financial situation or needs. Before acting, you should consult a licensed financial planner to determine whether purchasing property inside your SMSF is appropriate for you.