NSW Where to buy a unit for under $300K for SMSF

$230k compounded at 10% for 25 years would be worth $2,491,982.

I reckon you could buy any unit you like then.

You could consider buying an index fund.

 

But the seller is our SMSF, so the SMSF will need to pay CGT, and we the individuals as the buyer need to pay stamp duty for the purchase? Is transferring the property to our individual names the only way to allow us to live in the property?

 

just read this article SMSFs: Selling a property asset and CGT
and found out that no CGT during pension phase

 

No, the SMSF could transfer it to another's name - such as a trustee or another person.

There may be stamp duty concessions too.

 

I recently found this in SMH Money


Would the transfer of a property be an in specie transfer as you suggest and fall foul of APRA?

 

The depressing thing is that 7% is probably the mid-case return.
Assume inflation of 3% (and that is conservative based on energy lately)
That is a return of 4% before tax so $230k becomes roughly 1.1M (today's dollars)

Assuming retirement at 60 - and a 22 year "pension" of 100k - you need 2.2M (today's dollars) - note I took this from an online calculator - not scientific.

Halfway there!

 

Fall foul of the law you mean? It may or may not depending on the circumstances. Specific legal advice is needed.

 

Not answering the question But is there a tax downside in selling? Though you would have to manage the cashflow on both sides.

 

Go to the list of service providers on the forum - you will find a good group of people here.

 

For looong-term holds I'll probably stick to the main capital cities ie. Sydney, Melbourne, Brisbane, Perth, Adelaide. Where and what to buy is your investment decision.

Adelaide used to be cheap but now Perth is at the bottom of the cycle so great bargains to be had.

You really need to talk to a broker to see how much you can borrow in your SMSF. $230k is a decent fund size, I've seen plenty of people buy with less than $150k (with a mortgage) but lending has gotten tighter these days.

Assuming you can service the loan, a 70% LVR with $150k in deposit will give you a borrowing of $500k - now that'll give you a good quality asset in a capital city. Put the rest in non-property like good quality ETFs/LICs and keep adding to your super.

Can a $230k investment be worth more than $2Mil in 20 years? Maybe, maybe not. Can a $500k investment be worth more than $2Mil in 20 years, quite likely assuming you buy good quality stock in a capital city. Seek professional advice, talk to your broker first. Plenty of good ones on this forum.

 

SMSFs are by no means expensive to setup but they can be expensive for good advice. If you are doing nothing fancy and consider yourself a reasonably switched on person then use low cost online admins like esuperfund. They only come with service and zero advice. Many have bought property with esuperfund with no issues but if you need a bit of hand holding then pay a bit more and get someone that can provide advice on top for a fee ofcourse. @Redwood posts on here and he seems to have reasonable fees. There are others as well, just call around and have a chat.

Standalone SMSF Strategy review seems to be a trend these days, where you setup with an online admin and get someone else to review/provide strategy. I don't know if @Terry_w does this? I think SMSF Coach and others do this.

 

No, I only give legal advice.

 

I set up a SMSF with a Corporate trustee for $1,300. Not that expensive.

 

I did mine for a tad less than $900

eSuperfund is probably the cheapest at $650. $479 of that goes to ASIC for company registration.

But it's never the setup cost that is important, it's the ongoing admin/audit/tax and advice costs.

 

Don't forget the custodian trustee and trust if the SMSF will be borrowing to buy property.

 

Thanks @JohnPropChat, the reason why I'm a bit reluctant to have a big loan in SMSF is that it will affect my personal home loan borrowing power. I read somewhere that the liability (but not the rentals) that you have with the loan in the SMSF will be taken into account when you borrow with your own names. And I still want to to be able to purchase more outside of super in the next few years. Is my view correct?

 

Thanks for the recommendation with eSuperfund, I'm considering using it too. It looks like it does the ongoing compliance stuff for the SMSF too, is it right? I'm quite a hands on person, so as long as it looks after the government compliance paperwork as well, it's for me

 

Sorry @JohnPropChat, one more question, when you said advice you meant they will advise us on where to put the money, right? If we determine that we'll use the money to buy a house, we pretty much don't need any advice.

About ongoing admin/audit/tax costs, are they being taken care off and included in the fees by eSuperfund?

Thanks very much

 

D

Doesn't esuperfund channel you into the bank products - that is why they do it so cheap. You can only borrow with the listed providers.

 

AFAIK, that is correct but and it's up to you to weigh the pros and cons. I do remember a broker on this forum saying that they put the personal guarantee as a note on future applications rather than a liability and it's up to the lender to not consider it as part of your personal serviceability.