Don’t Make These Mistakes With Your SMSF


Don’t Make These Mistakes With Your SMSF

Thinking about using your SMSF to buy property?

Go to any weekend get together in Australia and there’s probably going to be a discussion or two about property, superannuation and investment.

As the population ages, there are more people in their late 40’s to mid 50’s who are considering boosting their retirement savings by using their self managed superannuation fund (SMSF) to purchase property.

This seems like a logical move for many people, especially when they can see property values skyrocketing.

But without professional advice, this seemingly easy solution to creating extra wealth in retirement can fail.

Seven years ago the Australia’s Superannuation Industry (Supervision) Act 1993 was amended to allow SMSF funds to gear investments by using limited recourse loans.

Since then the Australian Taxation Office estimates that these loans represent less than 0.5 per cent of total SMSF assets.

But there’s been a rise in dollars being borrowed with estimates  of around A$2.7 billion in limited recourse loans early in 2014.


Before you put your retirement savings in jeopardy, here are 7 key things to consider:

  1. Always get professional advice. Make sure the advice you get includes the appropriateness of the gearing strategy to the SMSF investment strategy and trust deed.
  2. Remember that the property your SMSF purchases can’t be lived in by you, other trustees or any one related to them.
  3. Know what can go wrong. What happens if you lose your job? What happens if geared assets lose value resulting in loss of savings? 
  4. Avoid buying ‘renovator’s dreams’ – there are strict rules that must be followed.
  5. Think about getting life insurance to cover the size of the loan
  6. Make sure the investment fits in with your overall investment plans.
  7. Plan your exit strategy with your advisor including the consequences of eventually selling the investment.

Like to get some FREE advice? Contact us for a consultation on 1300 296 388 or email us here.

The advice provided in this blog is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. For our full disclaimer, please click here.