The borrowing structure involves a loan to a SMSF Trustee with a Security Custodian purchasing the residential or commercial investment property on behalf of the SMSF. This Security Custodian, which must be a "bare trustee”, then holds the property as an asset on trust for the SMSF, which may be transferred to the SMSF at a future date.
The loan is secured against the investment property and while the loan is ideally self-servicing from the rental income derived from the property, servicing may also come from any other income received from unencumbered assets held by the SMSF or additional contributions made to the SMSF.
The loan is limited in recourse, with the Bank’s right against the SMSF limited to the Bank’s right as mortgagee in relation to the property. There is no recourse to any other assets of the SMSF.
- Diversification of possible investment strategy to include direct property acquisition
- Flexible repayment options supporting continued investment diversification
- Potential to accelerate wealth accumulation
- Potential for improved returns
- Potential tax benefits may be realised (independent financial advice must be sought)1
1. The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. Customers must seek their own independent tax advice in relation to their individual circumstances.
Finance offered by BankSA – A Division of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714. Eligibility criteria applies. Credit criteria, fees, charges, terms and conditions apply and are available on request. Please speak to your business finance specialist to find out more.
The information on our website is prepared without knowing your personal financial circumstances. Before you act on this, please consider if it's right for you.
Before making a decision, it's best to read the terms and conditions which are available on application. The information on our website is prepared without knowing your personal financial circumstances. Before you act on this, please consider if it's right for you.