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  • Buying property with an SMSF loan: What do you need to know?

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    Have you ever considered building wealth for your retirement with a self-managed super fund (SMSF)? It's a complex system that won't work for everyone, but if you have the required capital and the time to put into it, it could pay off.

    You must consider whether it's the absolute best decision for your financial goals before committing to any purchase.

    Buying a property with an SMSF loan from Mortgageport can make the investment easier for you. Of course, you must consider whether it's the absolute best decision for your financial goals before committing to any purchase. There are plenty of rules you need to abide by to avoid tax penalties on your SMSF property as well – knowing and sticking to these will help to keep your investment financially viable.

    What are the rules surrounding an SMSF property?

    For a start, any SMSF property must meet the 'sole purpose test', which means it only provides retirement benefits to members of your SMSF board. Other SMSF regulations about how to use your SMSF property are as follows:

    • The property must not be purchased from a family member of anyone on the SMSF board.
    • The property must not be lived in by a member of the board.
    • The property cannot be rented out by a member of the board, or any related parties (including family).

    Everyone on your SMSF board must know the rules and abide by them (if there is more than one person on the board). Holding regular meetings can ensure that the investment is being used in a legal way, and annual audits ensure you are complying with tax rules.

    SMSFs are excellent ways to have more control over your retirement investments, but you must have an appropriate amount of capital to make it worthwhile. NAB recommends at least $350,000 as a minimum – this can be spread over a number of people, however.

    A deposit for an SMSF home can be split over all of the people on your board.A deposit for an SMSF home can be split over all of the people on your board.

    How can Mortgageport help you to buy an SMSF property?

    Without the minimum recommended capital to start your SMSF investment and make it financially viable, an SMSF loan could be the right option. If an SMSF is not the right investment decision for you in the first place, an SMSF loan will not be suitable.

    If you are starting your SMSF investment scheme earlier, you will have more time to make capital gains, thus you may not need as much upfront capital. That's where an SMSF loan from Mortgageport can help – for more information, make sure you get in touch today.

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