Australian Investment Property and Self-Managed Superannuation

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Australian Investment Property and Self-Managed Superannuation

For many years generations of Australians have enjoyed a love affair with Property-Real Estate and it's not surprising that investment in property through Self-Managed Superannuation Funds (SMSF) is so popular with investors who have large cash reserves to draw on.   

This trend has increased since self-managed super funds SMSFs became eligible to borrow money to acquire direct property.  Property investing within your SMSF is a highly-regulated affair and playing by the rules is essential to avoid any negative aspects.   

The Australian Taxation Office (ATO) advises trustees of SMSFs to exercise caution and take theIR time to understand their obligations under the law.  Your fund must be structured appropriately, managed correctly, and must have a written investment strategy.   

Investments must be arms length and, in terms of property, ideally generate income and be able to be held for the long-term and seeking the advice of a professional in this field is essential.  It is very important to have absolutely set up before entering into a sales contract to purchase an investment property.   

Common mistakes many people make when setting up SMSFs include, the trusts not being established at the time contracts are signed and dated, the property being held in the individuals name rather than the trustee of the holding account, and Gearing that is not allowed under the law.    

It is good news that opportunities to invest in residential property with your SMSF is available however, it is critical that it is appropriate to your situation and you get reliable, independent professional advice before committing.