All of you will know that people with a SMSF can buy a house using their SMSF, but perhaps not all of you will know how much deposit you need and what other basic conditions you need to satisfy. I don't intend to go into a lot of detail, but here are the basics.
Deposit - you will need a deposit of 30% minimum.
Set up costs, Legal fees, Stamp Duty etc - you need to cover all of those costs from your own funds.
Capital Buffer - you are required to hold 10% of the funds assets in cash or other assets that are acceptable to the lender. IE if you buy a house for $800,000 then after all costs have been paid, the lender will expect you to still hold $80,000 in liquid funds. The lenders do have some discretion on this point.
Can you live in the house - only after you retire. That might work well for some people.
How are the payments met - the bank will use the rental income and the normal borrowers superannuation contributions to evaluate capacity to repay.
Negative Gearing - Yes the house purchase can be negatively geared but not against personal income, and with a 30% deposit the house rent should cover the repayments, so there is very little tax advantage.
Security - the house will be owned within a "Bare Trust" If the loan goes pear shaped and the bank has to call the loan in, the house can be sold, but there can be no call on any other assets owned by the superannuation fund. In that respect it is a "Limited Recourse" loan. However - the bank will take guarantees from the beneficiaries so there is "recourse" against the fund owners. In short, the bank can chase up the beneficiaries, but not assets held by the SMSF holding itself, outside of the Bare Trust.
Interest rates - these are higher than normal home loans. Somewhere around 5.6% is about average at the moment.
All of you will know that people with a SMSF can buy a house using their SMSF, but perhaps not all of you will know how much deposit you need and what other basic conditions you need to satisfy. I don't intend to go into a lot of detail, but here are the basics.
Deposit - you will need a deposit of 30% minimum.
Set up costs, Legal fees, Stamp Duty etc - you need to cover all of those costs from your own funds.
Capital Buffer - you are required to hold 10% of the funds assets in cash or other assets that are acceptable to the lender. IE if you buy a house for $800,000 then after all costs have been paid, the lender will expect you to still hold $80,000 in liquid funds. The lenders do have some discretion on this point.
Can you live in the house - only after you retire. That might work well for some people.
How are the payments met - the bank will use the rental income and the normal borrowers superannuation contributions to evaluate capacity to repay.
Negative Gearing - Yes the house purchase can be negatively geared but not against personal income, and with a 30% deposit the house rent should cover the repayments, so there is very little tax advantage.
Security - the house will be owned by a "Bare Trust" If the loan goes pear shaped and the bank has to call the loan in, the house can be sold, but there can be no call on any other assets owned by the superannuation fund. In that respect it is a "Limited Recourse" loan. However - the bank will take guarantees from the beneficiaries so there is "recourse" against the fund owners. In short, the bank can chase up the beneficiaries, but not assets held by the SMSF holding itself, outside of the Bare Trust.
Interest rates - these are higher than normal home loans. Somewhere around 5.6% is about average at the moment.
Have you come across a list of the basics on how you draw down on/get out of one of tha f***ers that you do own in your SMSF when you go into retirement Rufus?
Have you come across a list of the basics on how you draw down on/get out of one of tha f***ers that you do own in your SMSF when you go into retirement Rufus?
No herbie I haven't. I know you can but I think there is stamp duty to pay and it has to be done at a specific time, but I don't know the detail.
You need a financial adviser for that.
Take risks - if you win you will become wealthy, if you lose you will become wise
Point - 'N probably explains why there seems ta be such a dearth of info on it on tha net.
But anyways, I reckon I've researched it reasonably thoroughly now (wot wif it bein' applicable ta me in tha not too too distant future) 'n pretty much come up wif me own strategy that just might be most useful/appropriate for me.
But Ta anyway - Woz just goin' fish in case you had - On tha off chance it might contain any glaringly obvious basics I'd overlooked.
A Professional Demographer to an amateur demographer:"negative natural increase will never outweigh the positive net migration"
Point - 'N probably explains why there seems ta be such a dearth of info on it on tha net.
But anyways, I reckon I've researched it reasonably thoroughly now (wot wif it bein' applicable ta me in tha not too too distant future) 'n pretty much come up wif me own strategy that just might be most useful/appropriate for me.
But Ta anyway - Woz just goin' fish in case you had - On tha off chance it might contain any glaringly obvious basics I'd overlooked.
I'll find out.
Take risks - if you win you will become wealthy, if you lose you will become wise
I would still urge caution for people to seek professional finance advice when it comes to ...
"Can you live in the house - only after you retire. That might work well for some people."
Anyone can retire any time they want, especially if they have the funds to do so... that does not, however, mean they can live in a property that is owned by the SMSF... for that to be allowed, preservation age must have been reached.
In the situation where a couple have a property in their SMSF under both names... I believe BOTH couples need to have reached preservation age for them to live in it... not just one of them.
I would still urge caution for people to seek professional finance advice when it comes to ...
"Can you live in the house - only after you retire. That might work well for some people."
Anyone can retire any time they want, especially if they have the funds to do so... that does not, however, mean they can live in a property that is owned by the SMSF... for that to be allowed, preservation age must have been reached.
In the situation where a couple have a property in their SMSF under both names... I believe BOTH couples need to have reached preservation age for them to live in it... not just one of them.
Yes - fair points.
Take risks - if you win you will become wealthy, if you lose you will become wise
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