Burgess Thomson Offers Expert Legal Advice in Using SMSF to Invest in Real Estate | Newcastle Herald
The creation of a self-managed superannuation fund (SMSF) has long been considered the preserve of the wealthy.
But if you have at least $300,000 in superannuation or are a couple with a super combined of at least $300,000, it’s worth considering, according to James Thomson, director and senior attorney at Burgess. Thomson.
“With today’s low interest rates and surging real estate market, it may be a good idea to put your super to work and invest directly in real estate,” James said.
“An SMSF can be set up by individuals or couples allowing them to roll over their combined super balances into a single fund and invest in real estate.
“Once the funds are transferred to an SMSF bank account, they can be used to purchase property.
“It is also possible to borrow up to 80% to finance the purchase from several lenders and there are specialist mortgage brokers for SMSF loans.
“Using an SMSF in this way allows you to use your super to invest in property that can provide a stream of income for your retirement and capital gains, with the property being held in a structure that offers many fiscal advantages.”
Burgess Thomson are SMSF Real Estate Purchasing Legal Specialists and can assist with this process and fulfill lender requirements for loan and bare trust establishment.
“There are strict legal requirements regarding the types of properties that can be purchased in an SMSF and the use of those properties,” James said.
“The types of properties purchased must be commercial properties or residential properties purchased in arm’s length transactions.
“To borrow to fund an SMSF purchase, a simple trust must be in place to ensure that the borrowing is a limited recourse loan.
This means that the assets of the SMSF are protected in the event of default on the loan, because the only security for the loan is the property purchased, which is held in simple trust. However, most lenders will require personal guarantees to be provided for the loan.
“The property is separated into a simple trust which acts as custodian for the purchase. Once the loan is paid off, the title deed can then be transferred to the SMSF and if done correctly, additional transfer fees will not apply. should not be payable on the subsequent transfer to the SMSF.”
It is important to obtain expert legal and financial advice before exchanging contracts as there may be transfer rights implications if not done correctly, including the risk of double transfer rights payable if the simple trust is dated before the exchange of contracts, James said. .
“An SMSF may purchase commercial property from an SMSF member that is owned in their personal name,” he added. “The individual’s business can also lease the property from the SMSF on commercial terms.
“There are transfer tax concessions available for the transfer of commercial property held by SMSF members personally into their SMSF under certain circumstances. Provided the property is held in the same proportions as SMSF members, a reduced transfer tax of only $500 is payable.
“Burgess Thomson can help complete applications to Revenue NSW for these important concessions.”
Burgess Thomson has been one of Newcastle’s most reputable law firms since 1983 and is listed in the Legal 500 and Doyle’s Guide to top-ranked law firms.
- Assignment, real estate law and leases
- Wills, Estate Planning, Estates of Deceased Persons and Testamentary Disputes
- Business and commercial law and retirement pension
James has over 20 years of experience and has completed the Negotiation Program at Harvard Law School. He holds a Master of Laws from the University of Sydney and a Bachelor of Laws and Bachelor of Commerce (Accounting) from the University of NSW.
He is a member of the Law Society of NSW, Newcastle Law Society, Australian Institute of Company Directors, Commercial Law Association, Society of Trust and Estate Practitioners and SMSF Association.
Damian Burgess founded Burgess Thomson in 1983 and has over 40 years of legal experience. His personal approach, his dedication and his attention to detail ensure him a loyal clientele.
With a team of attorneys and paralegals, they take the time to get to know their clients and provide regular updates during what can sometimes be a stressful time in their lives.
“We do all our settlements electronically using PEXA, which means clients receive funds from their sale the same day and properties are transferred into our clients’ names immediately upon settlement,” said said James. “Clients can also download the PEXA Key app to their phone and use it to receive updates on the progress of their case.”
Burgess Thomson is located at 400 Hunter Street, Newcastle, directly opposite the New Courthouse, with parking available nearby. For more information call (02) 4929 5602, visit www.burgessthomson.com.au or email [email protected]