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I am planning to buy 1 IP through my SMSF.
The lending rates are not as good as for individuals though
and the cancelling of the stamp duty which will take place in July
does not apply to SMSF lending either.
It's very annoying...
Thanks for the quick reply. The financial planner I contacted told me the finance would be via BankWest, so that is why I asked. I will be checking around alot more before I commit. $20K seemed high to me, I will also look into how the cost is incurred, what included and what is not.
The reason I want to look at the SMSF is that I am planning on making some very substantial capital gains in the next few years, no need to access it really. I am in my late 40's and can get by comfortably on my other investments, so the CGT minimisation and asset protection are my main objectives. I am looking at a 15 year plan. Do you think a SMSF is a suitable strategy to achieve these outcomes?
[/CODE][/CODE]The down side to this seems to be the restrictive loan rules. Can I loan the SMSF the money from my own cash reserves. Can I borrow via a warrant at a later stage to undertake improvement/development on the site? How much can I contribute to the SMSF to start the fund.
jtw
Once again thanks for the prompt and helpful replies. This area is a potential minefield if I get it wrong. I am throwing around some ideas that clear the hurdles of the SMSF rules, borrowing criteria and the correct ownership structure to be able to use the asset as collateral in the short term and minimise CGT in years to come.
Would this work: I currently own a commercial asset with a registered business (ABN & GST) and have no debt on it. If I borrow an additional amount of money ($2 mil) develop the site and on completion, sell it to my SMSF for money owing (eg $2.4 mil after capitalised interest). The actual value of the property could be as much as double this. My business then commences leasing the site back at about 15% of the purchase price which would be about market value for the lease. The capital gain would grow in the SMSF for about another 10-15 years until sold for retirement. Could the money then be held in the SMSF and pay me a yearly pension. Is there a limit on how much my fund could pay me as a pension (I would be in my early 60's)
JTW
Non recourse,
Thank you so much you have cut through the fog for me. I am starting to see a possible course of action.
I assume the 'gift' is the value of the property over and above value paid. (eg value $4.8 mil sell $2.4 mil = $2.4 mil gift)
How much can I contribute after I turn 50years?
Can I run my business in the premises owned by my SMSF? or is this a conflict of interest. Can I pay above the market rate for the rent?
Could a unit trust borrow (using the commercial asset as security) 50% of the money, I use my PPOR (as security) for other 50% develop and repay the 50% the trust owes by the SMSF obtaining a compliant loan (warrant) thereby clearing the debt. The SMSF then slowly purchased X number of units @ $50k until it owns it?
Thanks in advance
JTW