SMSF Property Investment

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SMSF Property Investment.

At WT Capital, we specialise in SMSF property investing for people at all stages of life. From suburban homes to commercial buildings, real estate assets can help you to reduce risk and maximise returns before and after retirement. SMSF property investing is a complex and highly regulated field, with our financial experts offering diverse opportunities to help you thrive.

If you're interested in buying property with super, our SMSF investment property experts can make it happen.

What is an SMSF?

An SMSF is a super fund that is started and managed by yourself as the fund's trustee. This differs from a professionally managed fund — such as a retail or industry fund — where your super is managed for you, and in which you are a member of the fund, but not a trustee. Sometimes, a third party will be recruited to help manage the SMSF.

An SMSF can have a maximum of six members, and in most instances, these members must all be trustees of the fund. SMSFs provide trustees with a greater level of control regarding investment choices and opportunities, with the fund tailored to meet individual needs.

How does it work?

SMSFs are set up to provide financial benefits in retirement to their members. The trustees manage the fund by making investment decisions in the fund’s name. Legally, SMSFs must have a fully documented investment strategy, which is used to guide the trustees' investment decisions.

After signing a trust deed, the SMSF operates as its own entity. It must have its own Australian Business and Tax File numbers and a bank account to allow for investments, lump sums, pensions to be paid, and contributions and rollovers to be received.

Establishing an SMSF can be a time-consuming and complex process — it is therefore important that you work with credible financial professionals to avoid costly mistakes. At WT Capital, we work with trusted partners to provide you with a complete SMSF setup process, including organising an SMSF loan.

Who can be a member of an SMSF?

All members of an SMSF must be its trustees. To be eligible as a member of an SMSF, an individual must accept their responsibilities as a trustee by signing a trustee declaration.

They cannot be registered as bankrupt, have a current working relationship with another member (unless they are related), or have been previously disqualified as an SMSF trustee. If under 18, a member must be represented by a trustee who can act on their behalf.

Lastly, if there are any corporate trustees in the SMSF, each member must also be a registered company director.

Advantages of an SMSF

There are many advantages to establishing an SMSF:

More investment control — One of the most significant advantages of SMSFs is the greater level of control and flexibility that members have over where money is invested — including property.
Tax concessions and benefits — SMSFs are usually taxed at the concessional rate of 15%, and any benefits received by members after the age of 60 are tax-free. Also, when compared with other funds, SMSFs generally have greater flexibility for using tax strategies around taxable income and capital gains.
Asset protection — SMSFs provide a practical way to protect their member’s assets from future bankruptcy risks or creditor claims.
Cost-effective — SMSFs can be more cost-effective than other funds to operate as they grow.

At WT Capital, we’re committed to providing our clients with smart SMSF property investment solutions. If you’re ready to explore this exciting option further, check your eligibility, or take a look at some previous case studies. We also provide a handy retirement calculator for your convenience! If you have any questions about our services, please get in touch with our friendly and professional team today.

Frequently Asked Questions.

If you're in a SMSF, you can use money from the fund to purchase an investment property. This type of investment comes under 'sole purpose' classification by the ATO, which means it can only be used to generate retirement income.

Residential property investors can use a SMSF to purchase property, as long as funding is available and certain conditions are met. While you can buy multiple investment properties with a SMSF, you need to analyse your fund’s ability to meet all upfront and ongoing costs. Subsequent properties need to meet the same rules as the initial property. If you're not careful, adding properties can be detrimental to your fund’s investment goals.

SMSF property investing is restricted in many ways, including the 'sole purpose test' provision. The property in question needs to solely provide retirement benefits to fund members, which means it can't be used as a home in any way. Fund members and related parties are unable to live in or rent the home in any capacity.

It depends on what sort of property it is — commercial properties such as farming estates or business premises can be purchased this way if they have been run at arm’s length. However, residential property cannot be purchased this way; it represents a potential conflict of interest.

Yes. You are able to sell the property on the market at any time you wish.

If you have a common retail or industry fund, you can't make any decisions about investments, including property purchases. However, if you have a SMSF, you can purchase a wide range of properties, including residential, commercial, and industrial assets. This includes rural properties and vacant land.