If a Self-Managed Super Fund (SMSF) is legally able to invest in an asset it can borrow money to buy that asset. This includes both residential and commercial real estate as well as shares and managed funds. Being able to borrow through your SMSF enables trustees to consider property investments where they previously may not have had sufficient funds.
There are a number of very important rules and considerations that must be taken into account when borrowing to purchase property through your Self-Managed Super Fund. The experienced SMSF team at FC Lawyers will be able to guide you through your legal obligations to ensure that your purchase is compliant with the regulatory requirements.
The common vehicle to use when borrowing to purchase through an SMSF is referred to as a Bare Trust. Following is a diagram outlined what a typical borrowing arrangement looks like:
It is very important that you obtain expert legal advice as well as financial advice before entering into an arrangement to borrow funds and purchase through your SMSF. The appropriate financial strategy is equally as critical as establishing the legal entity before entering into a contract.
The SMSF team at FC Lawyers has extensive experience in establishing the appropriate documentation, advising clients of the appropriate structure to borrow in, liaising with banks and acting for clients in the acquisition of property.
We will also provide you with a fixed fee quote. Contact our team today to discuss borrowing through a SMSF, or if you have any SMSF general questions.
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