I have recently found out that a self-managed super fund could be a good structure to hold an investment property. The main advantage being that, once you are passed age 60, there is no income tax or capital gains tax payable.
I am considering putting our next investment property into a SMSF. This is likely to be a capital growth property that will have a significant negative cash flow for several years.
The question is how to get there though. I'd like to get some feedback from people who have put a property within a SMSF as I'm still confused as to what is actually achievable.
I have search through the forum previous posts. Nobody seems to be mentioning combining SMSF with a negatively geared investment property. Maybe it's a dumb idea?
I understand that some banks would lend to an SMSF, on a non-recourse basis only. They would then expect more equity, and may lend only 65 to 70% LVR. I understand that a SMSF can be set up for around 1k, and would cost about 1k per year as running costs.
My questions are:
Would the interest rate be similar to a standard IP loan, or maybe, say 1% above?
How does the lender assess loan serviceability? Does the lender expect the rental income to fully cover the interest? If not, how does the lender expect the interest payments to come from? As personal guarantees are a no-no for tax reasons, how does the lender protects itself?
Can you 'negatively gear' inside a SMSF? The tax rate is 15%, so the negative gearing benefit is lower. Wouldn't you need a substantial asset bases (maybe transfering your current stockmarket-invested super into the SMSF) first into the SMSF in order to use the property loss to reduce your super tax payable?
If you borrowed the extra 30% equity outside the SMSF structure, how can you claim the interest expense as a tax-deduction?
Many Thanks.
I am considering putting our next investment property into a SMSF. This is likely to be a capital growth property that will have a significant negative cash flow for several years.
The question is how to get there though. I'd like to get some feedback from people who have put a property within a SMSF as I'm still confused as to what is actually achievable.
I have search through the forum previous posts. Nobody seems to be mentioning combining SMSF with a negatively geared investment property. Maybe it's a dumb idea?
I understand that some banks would lend to an SMSF, on a non-recourse basis only. They would then expect more equity, and may lend only 65 to 70% LVR. I understand that a SMSF can be set up for around 1k, and would cost about 1k per year as running costs.
My questions are:
Would the interest rate be similar to a standard IP loan, or maybe, say 1% above?
How does the lender assess loan serviceability? Does the lender expect the rental income to fully cover the interest? If not, how does the lender expect the interest payments to come from? As personal guarantees are a no-no for tax reasons, how does the lender protects itself?
Can you 'negatively gear' inside a SMSF? The tax rate is 15%, so the negative gearing benefit is lower. Wouldn't you need a substantial asset bases (maybe transfering your current stockmarket-invested super into the SMSF) first into the SMSF in order to use the property loss to reduce your super tax payable?
If you borrowed the extra 30% equity outside the SMSF structure, how can you claim the interest expense as a tax-deduction?
Many Thanks.