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Property in your SMSF - Beware

SMSF and property investments: This is NOT for everyone. Although many property spruikers stand before you and sell the concept that everyone must buy a property in your SMSF. Birchcorp is here to say that there is much time and effort required for an investor to decide to embark on this complicated arrangement. Although Birchcorp is happy to say the process is as easy as 1,2,3... it is not a process that should be taken lightly. We are professionals and have processed these SMSF establishments and ongoing services many times. A complacent trustee can easily come into serious trouble with the governing bodies and importantly sacrifice their retirement monies.

Other concerning facts to consider: 

 

1. Gearing into property or other investments magnifies both gains and losses.

 

2. Annual accounting and auditing is required.

 

3. You as the trustee must do some serious homework in finding a property as Birchcorp will never sell you a property for obvious transparency (conflict of interest) reasons.

 

4. You have the obligation to rent the place and organise a rental manager to collect rent.

 

5. There are ongoing maintenance issues and other costs associated with investment properties that will be paid by your SMSF.

 

6. You cannot occupy or lease the property yourself or to any related party. There are a seperate set of rules for commerial property.  

 

7. You must produce an annual investment strategy to show how your SMSF has both planned to improve your retirement monies. You must also consider plans to diversify and insure if you are overweight in property and/ or have liquidity issues. We find this particularly important in the early years of an SMSF as property is what we call a lumpy asset. 

 

8. You must have an exit strategy for older clients and allow up to twenty years for the growth of property. This is a critical element.

 

9. We like to see a minimum of $150,000 in your SMSF but they can operate with lower balances for the specific client. i.e. A combined super balance of both Mum and Dad should be upwards of $150,000.

 

10. You should work very closely with professional advisers to stay in touch with the latest regulatory changes. As a specialist SMSF adviser Business Birchcorp has your ongoing compliance as our priority.

 

11. It is your responsibility as the trustee of the SMSF to consider personal insurances in the unforeseen circumstances that you are unable to work due to sickness or illness. A well planned insurance policy will ensure your SMSF has the ability to meet loan repayments and other expenses if you were placed in this situation. Again, these premiums may be paid from your SMSF.

 

As a mainstream Financial Planning firm, Birchcorp is well known as an education provider in the area of finance. We continually encourage face to face workshop days to ensure all our clients are comfortable with their investment decisions and their long term wealth creation. Workshops may include, but are not restricted to the following topics: Buying Property with your Super (SMSF), What to look for when Purchasing an Investment Property, Tricks and Strategies of the Sophisticated Investor, Preparing for Retirement, What business structure is right for me, and Estate Planning. More importantly, when you are a client of Birchcorp, we invite you to visit our office regularly to stay on top of your SMSF obligations, at no extra charge.


Property in your SMSF - Beware

SMSF and property investments: This is NOT for everyone. Although many property spruikers stand before you and sell the concept that everyone must buy a property in your SMSF. Birchcorp is here to say that there is much time and effort required for an investor to decide to embark on this complicated arrangement. Although Birchcorp is happy to say the process is as easy as 1,2,3... it is not a process that should be taken lightly. We are professionals and have processed these SMSF establishments and ongoing services many times. A complacent trustee can easily com... Read More

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Birchcorp Pty Ltd ABN 56 132 775 654 is a Corporate Authorised Representative (No. 339299)
of Dover Financial Advisers Pty Ltd ABN 87 112 139321, which is the holder of an AFSL No. 307248. Birchcorp Pty Ltd is an Accredited Member of the FBAA with an ACL No. 376718.