Ideas for an smsf purchase

I'm thinking I'll go for a simple resi ip in Melbourne and obviously what I can buy depends on budget. I'm interested in what other options I might have though. Anyone happy to share what you bought recently in smsf and budget?

 

I am not there yet but I would look at something very close to cf neutral or +ve. SMSF purchases tend to be long term holds in general as you can't value-add or extract equity. So don't want it eating into my super contributions.

 

Best case for resi is probably a new build.

Commercial would be far better tho IMO

 

Difficult for a SMSF to construct using borrowed money. It would need to be one contract for house and land or via a unit trust ownership structure which could not mortgage the land.

 

I didn't mean constructing, I meant purchasing new. Less maintenance costs, no need to add value (since smsf can't top up), depreciation benefits etc

 

I don't know anything about commercial. Any idea of artcles/contacts to research this more, not that I think I have the budget.

 

Looking into this also @ellejay some banks will not lend if property is less than 2 years old,have you got pre approval sorted with a particular bank?

 

Lots of banks won't lend to smsf new builds, less than 2 years old. Last I looked it was only Macquarie and then it's case by case.

 

I'm currently doing a build inside smsf, already own an office and another resi. Commercial be wary due to finance costs and potential vacancy so due diligence is key.

Inside smsf new property generally works better due to the long term nature of the investment and also depreciation benefits. You can get finance for NEW property - however consult a broker upfront to ensure there are no surprises, most likely valuation......Macquarie still does 80% off the plan but valuation must be within 5% of purchase price or contract.

Re commercial - lot of work involved - both on rate and the deal and risk of vacancy (i.e industrial...), even better why not buy a farm and live in the house? many of my clients do this and do it with a smile on their face.

Disclaimer... this is not financial advice or legal advice and cannot be relied upon - seek your own advice. I am authorised to issue advice but seek your own....


Cheers Ivan

 

I love the farm strategy, its all legal too.

 

I love the farm idea but no way would my super balance stretch to that, unless definition of farm is wide.

 

Same disclaimer as above....post 9..... and for my fee I have put smiles on peoples faces.

The farm is business real property (http://law.ato.gov.au/atolaw/view.htm?docid=SFR/SMSFR20091/NAT/ATO/00001)- so same applies to Redwood leases my office owned by the SMSF. The house you live in must be on less than 2 hectares and farm can be 1000 acres - doesnt matter just one title. Live in the house and lease the farm to a wonderful farm manager or your own company with a lease at commercial terms.

Be careful - more involved - advice needed...i.e any livestock? needs to be one title for LRBA.

You can get a loan depending on post code and size of security. If your curious, i'm happy to get a client to 'anonymously' share the success without self promotion.

Got another client I visit in regional VIC (actually there in far east Gippsland tomorrow) and have a beer sharing the success - he brews better than me.

Can you do this in a industry or employer sponsored fund? is someone going to tell me I need $200k in my SMSF to execute this strategy? NO - thats why SMSFs are about CONTROL and choice....this is a great strategy and there are 100 others,.....

Cheers Ivan

 

Hi Ivan, I would be interested to read more about this.

 

Hi, I am one of Redwoods happy farm dwelling customers. In late 2014 and Early 2015 Our SMSF settled on a 1000 acre property. We then struck a commercial lease to rent that back (all rent was payg deductible and paid to the SMSF) We did 50% finance through a major. We pay to the Concessional Caps and within 3-4 years the debt will be paid out totally. We only pay $0.15 cents in the dollar in what we pay off the principle, and our employer helps us with 9.5% of salary available for debt reduction or farm repair. "Repairs" to the leased property and farm infrastructure are the responsibility of the landlord (SMSF) so we pay only $0.15c per dollar tax through concessional caps on repairs. These repairs are then deductible as a cost for the SMSF entity. Additionally we had a depreciation schedule done, at a grand cost of $660 (through Redwood referral) delivering $200,000+ in non cash deductions over 20 years. My superfund gets a tax refund...... We formed a partnership for the primary production business, farming is an extremely tax freindly environment. Obviously rent, rates, insurances, vehicles, fuel, machinery, tools - you name it.... can all either be paid by the SMSF (landlord) or become tax deductible against off farm PAYG or non SMSF rental income.
I knew what I wanted to do, but after heaps of searching, Redwood was the only provider who agreed / knew it could be done, and provided an extremely high level of service to make it happen. I have 8 properties outside of super, but the SMSF Farm is by far the most tax effective wealth accumulation and tax reduction vehicle I have struck. Great structure, last year on $300k+ income we paid just $10k income tax.

 

great stuff! Thanks for sharing.

 

Interesting thread-need to explore more as me and my wife wants to combine our super to buy (resi ip/commercial/shares etc.) in smsf but if borrowing money is hard then property may not be possible.