The main fundamental advantage of SMSF loans is that borrowers can use the funds accumulated in their Super to invest directly in residential or commercial real estate.
It also has some favorable tax benefits. Interest and borrowing costs are generally tax deductible, which significantly reduces the retirement tax due within the fund.
Investing in commercial real estate with SMSF
Commercial real estate is less tightly regulated than residential real estate, making it an attractive addition to the SMSF’s investment strategy.
Commercial properties within the SMSF can be occupied by the owner (unlike residential SMSF). this is”commercial real estatemeans land and buildings used entirely and exclusively by your business. If your SMSF owns your business property, your business will pay rent directly to his SMSF. However, this must be the market rate (usually evaluated and issued by the lender’s evaluator).
Owning a commercial business freehold/facilities within the SMSF creates significant advantages and incentives, such as the ability of SMSF trustees to make a ‘net’ contribution. This means that a member can transfer pre-existing ownership of assets (whether held in a personal name or trust structure) to her SMSF.
Where businesses (freehold) are held within the SMSF, they are subject to asset protection. This means that assets are protected against future claims or liabilities that may arise from operating the business. Essentially, commercial property is not claimable if a commercial business ceases to trade due to bankruptcy, bankruptcy, or other enforceable action.
Refinancing an existing SMSF loan
SMSF Loan Refinancing, like any other loan refinancing, offers significant opportunities to access lower applicable interest rates and product terms of up to 30 years. Cashing out is not allowed, but loans must be $1 for $1. For example, refinancing a $500,000 SMSF loan to another institution allows for up to $500,000 in new borrowing. Many lenders have strict requirements when it comes to refinancing, so contact your broker if you want to check existing interest rates.
Check rates with SMSFr8
Use SMSFr8 to find out what your SMSF loan interest rate will be. Answer a few quick questions about your scenario, Receive a no-obligation quote At the most competitive rates for commercial or residential real estate.
SMSFr8 helps you start your SMSF loan journey. It can also be an existing SMSF rated soundboard for him.
How Blue Crane Capital Helps Securing SMSF Loans
At Blue Crane Capital, we understand commercial real estate finance better than anyone else thanks to the experience of our extensive team in commercial banking.
For the past five years, we have been recognized as the industry leader in arranging SMSF real estate loans, whether for owner occupancy or investment, for purchases and refinancing with SMSF.
We recently helped a client purchase a commercial investment property within SMSF. They had about $750,000 in accumulated cash and liquidity in their retirement pension. Through a non-bank lender, he was able to obtain a loan of $735,000 at an annual interest rate of 3.90%.
To learn more about how SMSF can be used as an investment vehicle, contact the Blue Crane team today.