Benefits of SMSF borrowing

Below are some key benefits of using your self managed super fund (SMSF) to acquire shares, managed funds or property.

1. Maximises the wealth effect in the SMSF in times when assets of the fund are rising. 
2. The borrowing can be for a short time period or for a period of up to 20+ years (if related party financing is used) allowing it to be structured to the underlying circumstances of the fund members. 
3. SMSF members and related businesses can act as lenders as long as all lending is at arm’s length
4. It increases the flow of non-contribution style funds into the SMSF particularly where the members of the super fund have used up their contributions capacity. Care must be taken to ensure that there is a genuine borrowing and not a contribution arrangement, otherwise the Commissioner may deem the borrowing to be a non-concessional contribution.
5. Future income and capital gains on underlying assets are taxed concessionally in a SMSF and may even be tax free where the assets are held for pension purposes.

If you are thinking about setting up a self managed super fund or would like to speak to a qualified financial planner about a SMSF investment strategy, speak to Intellichoice today on 1300 55 10 45. Intellichoice has experienced mortgage brokers who can assist with SMSF loans.