SMSF 100k startup too risky?

Thanks everyone for the information, I will wait until I get a more decent sum, meanwhile keep doing more research about this area :)
 
Check the legality of buying one property with your $100k :(.
I wanted to do this with our super to buy a commercial property to run our business from, but was told that we were not allowed to "leverage into a single asset"

That sounds to me like financial advice rather than a legal issue. Cynically, it may be that your advisor would like you to buy into managed funds where he gets a cut.
 
Right now my SMSF has zero dollars. It will borrow from me, 100% of the purchase price of 245k to buy an office for me to use. My accountant has advised this. The smsf will then repay me over time in a properly drawn up loan arrangement. The property is bought in the name of a pty ltd which is trustee for a bare property trust. Once the property is paid off, it will be transferred into smsf. Rent into smsf will be used to pay strata and repay the loan. I will also make 25k concessional contributions into smsf each year.


I have 150k in first state super which I will transfer into smsf over time.
Is an SMSF allowed to borrow from you as a person? I thought that there were issues with that- that it wasn't allowed by law.
 
Is an SMSF allowed to borrow from you as a person? I thought that there were issues with that- that it wasn't allowed by law.

You can't purchase a residential property and rent out it out to yourself or live in it but you can purchase a commercial property and rent it out to yourself. Strict agreement must be in place though.
 
Our accountant.. We wanted to use all our super as a 30% deposit on a comm property. He checked with the ATO and was advised no, not allowed to leverage into a single asset. This was 2-3 years ago so things may have changed

It's all about justification. Not everyone has to diversify assets if you don't want to. I would argue that diversification for the sake of diversification is what is irresponsible. If the trustee knows a particular asset class well and chooses to invest the vast bulk of the SMSF's money into that asset which is expected to generate a good return, then the duty is discharged in my view.
 
Is an SMSF allowed to borrow from you as a person? I thought that there were issues with that- that it wasn't allowed by law.

A SMSF can borrow from a member or related person. But not the other way around.

Has to be done properly otherwise it could be deemed to be a contribution and that could mean heavy taxes if over the caps etc.
 
That sounds to me like financial advice rather than a legal issue. Cynically, it may be that your advisor would like you to buy into managed funds where he gets a cut.

This is actually a trust law issue. Trustees must act prudently. This means they must wear those long bathing suits down to their knees and elbows and also that they must invest wisely and no take unnecessary risks etc. Putting all the trust's assets into one property which is highly geared may not be prudent. But if the fund is getting $XX per year in contributions, the property is insured, landlord's insurance etc then it may be justifiable.

(also financial advisors can no longer get commissions from managed funds etc - since july 1 this year)
 
A SMSF can borrow from a member or related person. But not the other way around.

Has to be done properly otherwise it could be deemed to be a contribution and that could mean heavy taxes if over the caps etc.

I see in another thread that it is being lent interest free. Does that make a difference?
 
I see in another thread that it is being lent interest free. Does that make a difference?

Not really. You could lend a SMSF, of which you are a member, interest free or with market interest. But you need to be careful and couldn't make too much profit or charge interest higher than you are borrowing money because this would be a way to extract money from the fund. e.g you borrow at 5% from a LOC and onlend it at 6% = money moving from the fund to the member.
 
In this case I understand that cash is being used to lend to the SMSF, so that no interest charges are being incurred by the lender. Does that then mean that he is restricted to interest free, or can a market interest rate be charged?
 
I am now 40 years of age, defacto relationship with my partner. Monthly company pays about $640 into my super. I am thinking of Ip for $400k

My concern would be that the lender may not approve your loan based on affordability. It seems you are only making the minimum SG contributions to super.

Some banks like to see additional contribution history of at least 2 years prior to giving you a loan.

your annual contributions may not cut it alone.
 
In this case I understand that cash is being used to lend to the SMSF, so that no interest charges are being incurred by the lender. Does that then mean that he is restricted to interest free, or can a market interest rate be charged?

could be market rates
 
I?ve recently checked my super balance and it is approaching $100k by the end of this year. As I?m like many others, would rather control this money under my own hand instead of relying super company to manage, I am exploring SMSF with particular interest in p
IP. I?ve read through numbers of dicussion in this forum regarding this topic, just want to see what forum members? thought about the risk for my case.

I am now 40 years of age, defacto relationship with my partner. Monthly company pays about $640 into my super. I am thinking of Ip for $400k, something like a 2 bedroom unit in Victoria. Is anyone sekf manage your super for ip with super balance if $100k? Is it a do-able thing or should wait until I reach a larger savingbin super?
Something else may come into consideration- how well is your current super performing?

I've just received a statement from a fund which has given me 1.6% for the year, in a year where the stock market has gone well. If you're getting such a poor performance yourself, you may consider that you could do much better yourself (you would have to do probably 2% better than your fund, to allow for SMSF fees). Remember that your own investments, shares or property, may receive growth as well as income, which will help your returns.

If you're getting a performance which has gone towards matching the performance of the ASX, leave it there.
 
I've just received a statement from a fund which has given me 1.6% for the year, in a year where the stock market has gone well..

Shocking isn't it, looking at a couple of indexes the ASX looks like it went up by about 17% over the FY, US by about 40% and the rest of the world (ex US) by about 24%
 
Shocking isn't it, looking at a couple of indexes the ASX looks like it went up by about 17% over the FY, US by about 40% and the rest of the world (ex US) by about 24%

It's pretty amazing really, how some funds consistently seem to manage returns like that, no matter what the conditions are.

It's not a small company.

I don't think I need to ask if the fund managers received their just reward, based on their performance. It takes something special to return a performance like that.
 
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