Buying a house out of superannuation

Hi Guys,

First post, I'm not sure if this is the best thread to post in but looks to be.

I am looking at buying a home out of my superannuation and have been told by a financial adviser that the only way to do this is through a self managed superannuation fund. The issue I have with this is the obvious fees that % are charged with self managed super funds.

Does anyone know if this can be done out of a "normal" industry super fund.

 

Do you mean you want to buy a house that the fund you are a member of owns?

Your last sentance contradicts your second sentance.

May you want to buy a house with your superannuation balance. If so you will need to set up a SMSF and have the trustee buy it. If there will be borrowings then a second trust is needed with the trustee of this trust buying it as custodian trustee for the SMSF.

 

Thanks a lot for that. Sold a house and want to buy one from super.

Looks like I have to do it out of a SMSF

 

Residential property can be acquired through a SMSF. Neither you nor a related party can live in it. It must be leased out but you / related party cannot be the tenant.

You mentioned there are fees associated with running a SMSF. This is true but unless your accountant takes the mickey, the fees are very reasonable. Your regular retail super fund is not fee-free....

 

The OP said....The issue I have with this is the obvious fees that % are charged with self managed super funds. SMSF fees are not a % issue. They comprise professional fees for accounting, tax and audit and costs of maintaining the fund incl bank charges, asic fees and the SMSF levy charged by the ATO. The fees will be % of the entire fund balances not a % based fee like most public and industry funds.One of the benefits of a SMSF is that fees tend to be somewhat fixed and dont change with balances. The cost of a $3m fund can be same as a $400K fund. They make a ideal vehicle to combined spouse super balances which can see a similiar fee for what may be twice the fund value. A third member doesnt mean three times the cost either.

1. Any super fund can acquire real property provided its not acquired from a member, relative or associate. Typically however public offer funds do not buy residential real estate as for a large investors there are too many property specific costs to justify such a investment. They would normally buy commercial property like office blocks and factory units or REIT units. This generally leaves a SMSF or SAF as the two choices

2. A SAF (small apra fund) can buy property also. SAFS are just like SMSF except the trsutee role is handed to a professional trustee company. They will impose stringent rules on what they will and wont accept.

3. SMSF. All members are trustees and all trustees are members. Max limit of 4 members and minimum of one. Couples can both be members. Some rules limit who cannot be a member (ie an employer / employee cannot often setup a SMSF). Basic rationale is that all members are equally involved in investment decisions and responsible for the fund BUT they can still delegate to professionals at times.

In all cases the fund property cannot be used by a member, trustee member of any related party..

Unless your accountant has a AFSL and gave financial advice then he/she isnt allowed to give recommendations as this would be unlicensed advice now. So in summary - You should get financial advice. These questions you ask indicate you havent done that or if you did it was badly explained.