SMSF for property investment

Hi,

I'm hoping some one can point me in the right direction re: SMSF's for property purchasing.

The reason for pursuing this is to increase my super growth. However, I'm unsure if buying a property using a SMSF will have any impact on my current property investment journey in terms of serviceability for future investment home loans. Is this something to factor in before setting up a SMSF for this reason? Or are they 2 completely different scenarios?

My wife and I currently have a PPOR and 2 IP's. I would like to maximize our super as well as continuing our property investment journey.

I believe we meet the minimum requirements of having enough super funds for a 30% deposit and 10% buffer.

I'm chatting to financial planners and interested to hear what other factors I should consider.

Cheers.

 

Hi

This question could possibly be better posted in the Investment strategy/finance sections of the forum.

There are lots of questions around using SMSF for purchasing IPs - try the search function to see if anything posted previously is of assistance to you. eg - SMSF for property investment

Hope this helps.

 

Shame, shame, shame .... the sheer mention of property in the Other Assets section of the forum has me feeling nauseous. No even worse ....


Only joking.

 

Yes it would generally hurt serviceability as a guarantee is generally taken to be a loan for future Serviceability.

 

Cheers for the advice all. I'll do some more digging...

 

Thanks Terry. I'll look more into this. Interested to find out if a cashflow neutral/positive SMSF property would still negatively affect serviceability in this current environment.

 

Lending within an SMSF does not hurt your servicing/borrowing capacity outside of the SMSF with most lenders such as Westpac, Macquarie, NAB, St George, etc.

The only lender where it does hurt your personal servicing is CBA - they do include the SMSF debt in your personal liability position.

If you are a medico then you can borrow up to 100% for an SMSF provide the loan amount is under $1mil.

 

Suncorp have told me that guarntees for a SMSF loan would be treated as the same as borrowings outside super - haven't tested it.

 

Missing the point. Person A is an individual... Company B is the SMSF

Person A provides a guarantee to the LRBA ( SMSF loan) for Company B. What @Terry_w is saying is that because Person A has provided that personal guarantee, the next time Person A tries to borrow in their personal name, bank servicing calcs consider the SMSF debt ( held by Company B) to belong to Person A , but not the SMSF rental income ( received by Company B) ... and thats what kills Person A's servicing.

There appears to be some conjecture here as to whether some banks do or do not treat your personal borrowing capacity this way..... @Shahin and @Terry_w can hash that out

But as far as your personal borrowing capacity is concerned...it wouldn't matter if the SMSF was neutral, negative or 100K CF+.... the rental income received by the SMSF is never considered YOUR income for servicing when you are borrowing in YOUR name ... it belongs to the SMSF not you.

The only question here is the impact of SMSF personal guarantees on your personal borrowing power

 

Yes some banks do take guarantees into account while other banks don't.

 

Here is the list of lenders that do consider the SMSF debt and don't:

AMP: No
ANZ: No
St George: No
Westpac: No
NAB: No (as exception)
Macquarie:No
Citibank: No
ING: No
Bankwest: No
Auswide: No (provided the property is self servicing from the rental income)
Adelaide Bank: No
MyState: No

CBA: Yes

I dont know about any other lender that's not mentioned in the above list as they would represent a very small portion of loans. Taking Suncorp as an example, it would be an extremely rare scenario where Suncorp is the only lender of choice, i.e. something they can do that no one else can do.

 

One thing to think about is having access to the equity within the super fo deposits though this may not be an issue to some with the change in serviceability rules .

It’s effectivness comes down to the effectiveness of the underlying investment .

Cliff