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[MoreMore Insights] SMSF Loan


In Australia, you can use self-managed super fund (SMSF) to purchase property for investment purpose. The rental income from the investment property, and the increase in the property value itself, can build up your superannuation amount.

And you can also borrow money to purchase the new investment property under the super fund trust. But you will need to use a particular lending product called ‘SMSF loan’.

Please be aware, that there are very limited lenders in the market that can still do SMSF lending. Contact your mortgage broker to find the lender that best suits you.

Why Borrow under Super Fund?

SMSF borrowing can allow the funds to invest in property which may otherwise not have sufficient savings to purchase. By doing so, you may diversify its investments and potentially improve its income and growth.

You can use the rental income to pay the SMSF loan, and in some cases, you might also be able to claim the expenses as tax deductions. With negative gearing in place, you can lower the effective tax rate as well.

Potential Risks

Only certain properties can be acquired: Residential property that you or a related party currently own cannot be acquired under SMSF. And the property purchased under SMSF can only be used for investment purpose.

There are many other complex rules when borrowing within SMSF. All SMSFs are regulated and audited by Australian Taxation Office (ATO) on a regular basis, and that is to ensure all rules are followed.

Please note the information in this article is general information only, and may not be suitable for you. If you want to use self-managed super fund to purchase investment property, it’s important for you to seek professional advice from your financial planner and mortgage broker.

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