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  • Profile photo of CafankCafank
    Participant
    @cafank
    Join Date: 2004
    Post Count: 19

    Now I am really confused – what a way to start a new year!

     I have several IP's in my name and need to make a change, and after spending hours reading posts here I just don't know which way to go – and I am ready to purchase again now. My accountant says that I should form a SMSF and purchase properties through this (would have to use my savings to top up my super to about 280K to set up) but I am not so sure.

    After reading (again) Steve's book, and all of the recent forum posts here, I like the idea of a trust. I am solo, no dependants and I have always looked at my IP's as my 'super'.

    I obviously need some more advice about which way to go and doubt that my accountant is really going to be of more help… I am aware of the tax benefits if I go to SMSF but am just learning about tax implications of trusts.

    Any suggestions, information would be greatly appreciated.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Just keep reading. Read everything you can about trusts and SMSFs

    See http://www.trustdeed.com.au for some good strategies on buying property in SMSFs. It sounds very good, but once you have the property and the loan you will be unable to access any future equity to buy more. This makes it unattractive to me.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of CafankCafank
    Participant
    @cafank
    Join Date: 2004
    Post Count: 19

    Thanks Terry, I have been reading all week and am really getting turned off SMSF as my savings fund will be depleted and that will restrict my future buying (and traveling – another passion).

    Had already found http://www.trustdeed.com.au and liked their info. I think I will now be concentrating on learning more about trusts for IP's. I already have finance approved for another purchase so that may not get into trust but my goal is another 2 properties by June – they will have to be somewhere other than in my name.

    Cheers, and Happy New Year, Cheryl

    Profile photo of FletcherTaxFletcherTax
    Member
    @fletchertax
    Join Date: 2009
    Post Count: 31

    May I suggest discussing your plans with an accountant and a financial adviser. Both look at your situation from a different point of view and hopefully between the 3 of you lead to a beneficial scenario.

    My advice would be to give your accountant/adviser as much information as possible about what exactly you want to invest in and any family circumstances which are in the mix to get the most efficient feedback and results.

    Fletcher Tax Accountants
    http://www.fletchertaxaccountants.com.au

    Profile photo of Grow SMSFGrow SMSF
    Participant
    @evolve
    Join Date: 2009
    Post Count: 66

    I have had a look at Personal Name v Trust v SMSF as the structure to purchase argument in a lot of detail recently.

    There is no right or wrong answer – it needs to be the best one for your situation – so sitting down with an accountant and a planner may be a good idea.

    As mentioned in this thread a major downside with purchasing via an SMSF is the inability to utilise any equity without selling.  One work around solution if the property is positively geared is to pay interest only as long as possible (up to 10 years based on the current loan products out there) and build up the excess cash + super contributions (tax deductible contributions ).  This excess cash can then be used to buy property number 2 etc etc

    I also read some where that the typical investment property is sold after 4-7 years – so for a lot of people the inability to access equity in the short term may not be that big of an issue.

    Cheryl – you mentioned that you see your IPs as your super – wouldn't be wonderful it be wonderful to retire and have all that rental income funding your travel adventures tax free?  That is the carrot  – but you have to watch out for the stick in the meantime!

    I am biased towards purchasing investment properties within super – and I beleive if more people knew what I know, they would be too.

    I would love for people to through any questions regarding this topic my way.

    Grow SMSF | Grow SMSF
    https://growsmsf.com.au
    Email Me | Phone Me

    Self-Managed Super Fund (SMSF) Specialist Accountants

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