Self Managed Super Fund...borrowing to buy an asset

Borrowing in a Self Managed Super Fund

Self Managed Super Funds can now borrow to invest in an asset. The borrowing is typically referred to as an Instalment Warrant, but for all intents and purposes it is similar to borrowing money to buy a house in your own name.

Self Managed Super Funds are becoming a very popular retirement investment vehicle, as people want control over their retirement investments. Borrowing money to invest in an asset within your Self Managed Super Fund is yet a further reason why more people are looking at beginning a SMSF. Please see the below presentation to find out how you can borrow money to invest in an asset within your Self Managed Super Fund structure.

It seems people taking a borrowing in their SMSF up, are small & medium business owners who use their SMSF to acquire the business premises. This works as any other commercial lease would. The SMSF own's the business premises and leases it back to the business.

There are many options to consider if you are keen on borrowing within your Self Managed Super Fund, please contact Rogerson Kenny Business Accountants Melbourne as an initial step to see what is possible.

Basically, the legislative framework allows the implementation of the following tailored structure:

1. a special purpose trust (a bare trust) is established for the benefit of the Self Managed Super Fund;
2. the Self Managed Super Fund trustee borrows to fund the purchase of the asset (must be an allowable asset) to be held on trust for the benefits of the Self Managed Super Fund;
3. the borrowed funds are used by the bare trust to purchase the asset in which the Self Managed Super Fund trustee acquires a beneficial interest;
4. the Self Managed Super Fund makes payments (installments) to the bare trust under an arrangement pursuant to which, the Self Managed Super Fund has the right to acquire legal title to the asset after making one or more such installments; and
5. a limited recourse loan agreement limits the rights of the lender (who doesn't have to be a bank - can be Dad or Uncle Dave - or You!) to the title of the asset held in the bare trust.

Rogerson Kenny Business Accountants Melbourne can't stress enough - you must seek professional advice from experienced professionals who have handled a borrowing within a Self Managed Super Fund before. Contact Rogerson Kenny Business Accountants Melbourne for a free initial consultation