Expanding Your Investment Horizons: Buying Property with Your Self-Managed Super Fund

Oct 20

Expanding Your Investment Horizons: Buying Property with Your Self-Managed Super Fund

Embarking on the journey of purchasing property through your Self-Managed Super Fund (SMSF) is a strategic decision that can enhance your retirement savings and provide substantial financial benefits if managed correctly.

At Argon Law, we aim to demystify this process, providing you with comprehensive advice and guiding you step-by-step to ensure a successful investment.

How to Use a Self-Managed Super Fund to Buy Property

When considering a property purchase via your SMSF property investment, there are a few key steps which are important to remember: 

  • Having a robust team of advisors who understand the nuances of SMSF investments.
  • Ensuring all financial and trust structures are established before committing to any property agreements.
  • Exploring opportunities to reduce transaction costs without compromising on compliance or security.

Understanding the Role of Your SMSF Advisory Team

Investing in property through your SMSF requires careful planning and expert advice. We emphasise the importance of assembling a knowledgeable team, including lawyers, accountants, and financial advisors, who have had extensive experience in SMSF investments. 

This team will guide you through the complexities of SMSF property investment, helping you avoid common pitfalls such as regulatory non-compliance and poorly structured investments. 

Setting Up the Correct Structure for your Property Purchase

A critical step in purchasing property through your SMSF involves setting up a separate trust, commonly known as a bare trust or property trust. This legal structure allows your SMSF to borrow funds to purchase the property, with the property itself held within the bare trust. This setup protects your fund's other assets and ensures compliance with Australian Superannuation legislation.

If you are lucky enough not to need to borrow for the purchase, then you won’t need the bare trust and can purchase in the name of your Self-Managed Super Fund’s trustee.

At Argon Law, we are committed to providing our clients with holistic legal advice which considers all aspects of your individual and business structures.

Cost-Effective Financing Strategies Within Your SMSF

Financing a SMSF property purchase often involves additional legal scrutiny from lenders. Lenders typically require their legal counsel to review your trust and loan documents, which can add to your costs. To minimise these expenses, we recommend using legal documents and structures that are familiar to the lender’s legal team. In some cases, employing the lender’s preferred lawyers for your transaction can lead to a smoother process and lower costs.

Furthermore, lenders may require a lawyer's certification confirming that you understand the loan and security arrangements. Familiarising yourself with these requirements, and how they can be efficiently managed, can prevent unnecessary legal fees. At Argon Law, we have experience in providing these certifications in the most cost-effective manner, ensuring that you meet lender requirements without undue expense.

Timing and Legal Considerations

Timing is crucial throughout this process. A common mistake is entering into property purchase contracts before establishing the necessary trusts and financial structures. This can lead to significant complications, including breaches of trust and compliance issues. 

As your legal advisors, we ensure that all structures are correctly in place before you proceed with any property purchase, safeguarding your investment and ensuring everything is legally compliant.

Whether you are a seasoned investor or new to SMSFs, our team is here to assist you at every step of your investment journey, ensuring that your decisions are informed, strategic, and legally sound. For more insights or to discuss your specific investment needs, please don’t hesitate to call or email us or reach out via our contact form.  

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