Hi, I’m Grant Abbott and I’m principal of SMSF Strategies, and also Chairman of the Australian SMSF Member's Association. Today we're talking about my top five tips and also strategies and pitfalls of doing SMSF borrowing. The first strategy, and probably the most important, which is also a pitfall for many, is getting a really good trust deed. The self-managed super fund, which is going to go and borrow in order to acquire a property, really needs to have a fantastic deed, a 2012 trust deed. Um, our deed, the SMSF Strategies Deed has been through the ringer by all the banks' legal departments, and you need to have something that’s 2012, otherwise it won't get through. So, first strategy, make sure you get a good deed. Second one is probably most important, is to get a good investment property. What I like to say to people is the property that you’re going to hold inside that fund needs to be sold perhaps at age 75, so look for a property that you’re not going to flip in or flip out at a really quick position, look at it, do you need the income, are you at the income stage in the fund, say at age 55, or you’re close to it, or you going really for accumulation? If you’re going for accumulation, maybe not look for something that’s got a huge amount of income, but it's a lot got of, a lot of capitol growth over the next 30/40 years up to about age 75.
Probably the hottest strategy at the moment is being able to buy property through your self-managed super fund. We're not talking commercial property, we're talking waterfront property, we're talking investment property, we're talking rural property, and that really is a, an amazing strategy that's really taken the superannuation industry by storm. But importantly most people don't know how to do it. So I'm going to give you the good oil on how to set up a SMSF property borrowing. The first thing you need to have is of course, um, a self-managed superannuation fund. That needs to be an up-to-date 2012 deed, otherwise it's not going to pass muster with the bank. That will then have to have a corporate trustee on it. You never, ever want to set up a self-managed super fund with individual trustees for longevity purposes. Now under the law you need to have, what we call, a holding trust.
Traps and Pitfalls of SMSF Borrowing
More than 50,000 SMSFs expected to borrow this year -- will you be one of them?
Don't do SMSF Borrowing Yourself
Get good SMSF Borrowing Advice
Get a Good Bank and Watch the Conditions
Go to http://www.smsfstrategies.com for all videos and borrowing documents
Hi, I'm Grant Abbott, I'm principle of SMSF Strategies, and also chairman of the Australian SMSF Members Association. Over the past year I've been travelling all across Australia and talking to crowds on behalf of financial planners, or accountants, who specialise in limited recourse borrowing arrangements, or SMSF borrowing arrangements to acquire property. Now the thing that gets the crowd really excited and motivated, particular if they're property investors, is how to transfer property from outside into a superannuation fund. So, let me give you the drill on exactly how it's done. First off we need to have a really modern self-managed superannuation fund, we need to get a modern deed, now we've spoken about this many times, SMSF Strategies Trust Deed, 2012 version, absolutely a must have. What we need from there is also then to have a, a set of property outside. Now, the rules inside the tax laws, and also the superannuation laws, say unfortunately we can't transfer property that we own, or our family trust owns, or our family company or relative owns, into a superannuation fund, unless it's business real property. Now what's business real property? It includes a farm, it includes effectively a factory, it includes an office, it includes basically anything that there's a business involved with.