Embedded FAQ Customisation Request

Using SMSF borrowing to invest in real estate requires careful consideration. Even more so if the SMSF does not yet exist. This Frequently Asked question module provides you with information to assist you in your decision. It provides you with facts, not advice, and refers you to sources of additional information. The ultimate decision and responsibility is yours. This FAQ is maintained for us by SMSF Alliance. It is not a replacement for comprehensive financial planning advice which we can provide you with on request.

The lower the loan to valuation ratio (LVR) the lower the risk. A 65% loan to valuation ratio would generally maintain a positive cash flow for a fully tenanted property. Possible loan to valuation ratios will depend on a number of factors but generally; Generally Residential Properties can be geared to 80% LVR (may vary by postcode and lender and could be as high as 90%). Generally Commercial Properties can be geared, typically, to 65% – 70% LVR (depending on the lender). Loan limits are generally between $100,000 and $4,000,000 (depending on the lender and property type). Rural/Farm Property Considerations are subject to lower limits (around 50% LVR) with additional restrictions based on land size and location.

All costs are payable by your SMSF so costs paid by you before the SMSF is established, may generally be reimbursed or processed as a member contribution. You will need a New SMSF with Trustee Company: $1,038 Bare (Custodian) Trust with Trustee Company: $1,311

Our Adviser Fees: $3,000 – $4,000 Legal Conveyancing: $1,000 – $2,000 (Varies by Solicitor) Lender Legal & Loan Fees: $1,500 – $2,500 (Subject to Lender)

Your SMSF needs to be visible on the ATO’s Super Fund Lookup site. If it is not, it’s probably because your SMSF’s tax returns are two years overdue. It can take a couple of months for it to be reinstated after they are lodged. If the SMSF has a corporate trustee and an acceptable trust deed, you just need a Bare (Custodian) Trust with Trustee Company: $1,311 If not, you may also need Replacement Trustee Company, including deed alteration to reflect the change (if current trustees are individual): $1,093 Optional deed upgrade to most up to date wording including the ability to borrow: $495 Note that, if you change trustees, it will be necessary for the names in which all existing investments are held to be changed to that of the new corporate trustee. This is important for audit, but the bank account may need particularly urgent attention as the bank may require a new account. You will need to attend to this.

Our Adviser Fees: $3,000 – $4,000 Legal Conveyancing: $1,000 – $2,000 (Varies by Solicitor) Lender Legal & Loan Fees: $1,500 – $2,500 (Subject to Lender)

Fees are variable depending on provider but, based on the fee schedule provided by SMSF Alliance Accounting & Audit Fees: Estimated Annual Cost: $2,562 to $3,006 (depending on the other investments in the fund) including independent audit Additional Regulatory Fees (Paid by the SMSF Annually): ATO Supervisory Levy: $259 ($518 in the first year) ASIC Annual Review Fee – SMSF Trustee Company: $63 ASIC Annual Review Fee – Bare Trustee Company: $310 Fees are current as of 1 January 2025

We will charge you…………

Once your SMSF has been properly registered with the ATO it will appear on Super Fund Lookup. This is essential before your current fund can rollover your benefits. You can request the rollover from them directly or via your MyGov site. You will need your SMSF’s name and corporate trustee, bank account details electronic service address (ESA) and member number (if appliacable) which will be available from your SMSF’s administrator. To prevent fraud, if the ATO’s records do not match the records you have provided, the rollover will not occur, otherwise it should happen within 3 to 5 days. We can assist on request.

Rolling over superannuation monies from your existing fund will cancel your life insurance as this cannot be rolled over. Should you lose this cover, it is possible that you may not be able to arrange new cover or, if you can, it may be on different terms and more expensive. You can choose to make arrangements with your existing fund to retain the cover by leaving a minimum balance and paying their required ongoing minimum contributions arrange new cover within your SMSF BEFORE rolling over. We can assist you with these considerations. If you have made personal concessional contributions that you wish to claim in your personal tax return, you will need to provide a S290-170 Notice of Intent to Claim to your current super fund before rolling over your account. If you don’t, you will lose your ability to claim the tax deduction. If this applies to you, you should speak with your existing super fund to make the arrangement.

Consider pre-approval for an SMSF loan to expedite the purchase process and to avoid the cost of SMSF establishment if not approved. This may require you to gather two years of financial statements, tax returns (personal & business), and super statements (if already operational) for loan approval (3-4 weeks processing time). You, and any other members, will need a director identification number before becoming a director on any new company so, if you don’t already have one, apply now as, without a DIN the corporate trustee establishment cannot proceed at all. Establish your SMSF well before purchasing. Documents can generally not be signed electronically so consider mail delays as well as ATO random checking and biometric testing. The process can take between one and 10 weeks. The Bare Trust corporate trustee should be established at the same time as the SMSF. That way all documents, except the finalised bare trust deed, can be executed in one sitting. Rollover funds from existing super accounts. This usually takes from 3 to 10 days. Sign the purchase contract correctly and ensure the bare trust documents are in accordance with it. Allocate at least 6 weeks (ideally 8 weeks) for processing between contract signing and settlement.

Wordings about SMSF Alliance. This is optional. Our requirement is that we provide SMSF services to the clients this FAQ generates, we are not after the recognition.

Please add any other changes you'd like. You can add an attachment in Word if there isn't enough room.