May News

INTEREST RATES ON HOLD FOR ANOTHER MONTH

The Reserve Bank of Australia decided to leave the cash rate unchanged at 3% when they met on Tuesday5 May 2009.  Governor Glenn Stevens noted in his statement that although credit remained tight and confidence remained fragile, there were signs of economic recovery in several countries, particularly China.  He noted that the board is waiting to observe the effects of historically low mortgage rates combined with substantial financial stimulus before assessing whether further reductions in the cash rate were required.

INVESTING IN PROPERTY WITH YOUR SELF-MANAGED SUPER FUND

Leading Home Loans with RetireInvest can help you invest in the property market with your self-managed super fund (SMSF).

Recent changes to the Superannuation Industry (Supervision) Act 1993 (Cth) and Regulations (SIS Act) now allows super fund trustees to borrow in order to purchase certain investment assets, including residential, commercial and rural property.  Using your SMSF to purchase property has significant taxation advantages, especially since SMSFs are taxed only at 15% on contributions, and 15% on earnings, and once the fund is in the pension phase, no capital gains tax is payable if the property is sold. 

The superannuation law and taxation advantages are complex which is why we recommend you contact RetireInvest Caloundra and speak to Kellie Payne or Ken Johnston, who can provide expert advice in this area.  They can help you set up your SMSF, advise you whether using your SMSF to invest in property is right for your life-stage and recommend a strategy. 

There are five lenders on our panel who have specialist products for SMSFs wishing to borrow to purchase property.  These products have similar features, such as:

·         Commercial or Rural premises may be leased by the SMSF members or a related party;

·         Residential premises may not be leased by a SMSF member or a related party;

·         The loan must be for new property – you may not refinance an existing SMSF asset;

·         Redraw, cash out or top-ups are not permitted;

·         Residential property LVR up to 80%;

·         Commercial or Rural property LVR up to 65%.

Minimum fund balances and fees vary between the lenders so please contact one of our loan consultants to discuss which might suit you best.  Perhaps you have sufficient equity in property outside your superfund.  You could set up a line of credit and loan the funds to your SMSF (RetireInvest Caloundra can assist you with the loan documentation too).

If you have any questions, or would like us to undertake a comparison for you, please feel free to call 1300 307 771 any time.  Of course there’s no obligation and our service to you is free.