Frequently Asked Questions
Take a look at our frequently asked questions below to learn more about property investment and SMSFs. If you have a question that’s not listed below don’t hesitate to contact our team.
Equity share schemes have been proven successful by state and federal governments. This innovative solution enables silent, passive investors to acquire equity in your home (typically 20-30%) so that you as the owner-occupier only need to mortgage the remaining cost of the home. From the lender’s perspective, if a 20-30% deposit has already been paid by an investor, the lender’s risk is sufficiently reduced and the maximum deposit they will ask you to pay will be minimal.
The homeowner can sell the house at any time. The mortgage is paid off and the equity share is paid back as a percentage of the sale price. The homeowner keeps anything remaining.
Yes, you can purchase any property as your home with this equity share model so long as the bank will provide the mortgage on the property as they may have their own criteria.
If you are eligible for any government help to purchase your home, you can still use that with this equity share model.
There are a number of mortgage brokers that are already experts in this model and they will help you with you finance application.
The common preconceived misconception is that SMSFs attract higher fees and are always more expensive to run, but this is simply not true. The fees for an SMSF actually become cheaper in the long run, once your balance exceeds $200,000. This is because (on average) industry and retail super funds charge between 1–2% of your balance in fees. So, if your super balance in a retail or industry fund is $400,000, you can expect to pay between $4,000–$8,000 in annual fees. This is significantly higher than the fixed fee model of SMSF, where the average yearly fee is only $2,000 p.a. regardless of the balance.
Your SMSF is managed by a professional financial planner and accountant, which takes the complexity out of it. The SMSF is at arm’s length, operating in the background, just like an industry or retail super fund.
There are two types of SMSFs. The first is structured for an individual trustee, which means there are two to four members. Each member of the fund must be a trustee, and each trustee must be a member of the fund.
The second type is structured for a corporate trustee. This type is composed of one to four members and each must be a director of a corporate company, and each director must be a member of the fund. ASIC charges a fee for annual review and a one-off setup cost of around $1,000 for each SMSF structure.
You can access your SMSF once you retire and reach your preservation age, which is between 55 and 60. If you haven’t permanently retired yet but you’ve reached your preservation age, you can still access some of it through the transition to retirement.
You will need a minimum of $150,000 individually or combined with your partner. You can have up to four people create an SMSF or investment strategy together.
Yes, the Superannuation Industry Legislation (SIS) requires all SMSFs to have an investment strategy. However, no specific format for an investment strategy is mandated and it will vary from fund to fund. When planning your strategy, it is best to seek expert guidance from an industry professional financial planner.
The most important thing to do before you start is to get specialist advice from investment experts. Knowing the right strategies before putting your money on the line for any investments is key.
Yes, SMSF pension is taxable at the concessional rate of 15%. However, according to the Australian Taxation Office (ATO), the investment income an SMSF receives from its assets is tax-exempt if those assets are supporting retirement phase income streams. This is called exempt current pension income (ECPI). Which means it is tax free!